Alpha Metallurgical Resources, Inc. - Quarter Report: 2023 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-38735

ALPHA METALLURGICAL RESOURCES, INC.

(Exact name of registrant as specified in its charter)


Delaware						81-3015061
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

340 Martin Luther King Jr. Blvd.
Bristol, Tennessee 37620
(Address of principal executive offices, zip code)
(423) 573-0300
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ Yes x No

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	AMR	New York Stock Exchange

Number of shares of the registrant’s Common Stock, $0.01 par value, outstanding as of July 31, 2023: 13,687,474


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	Cautionary Note Regarding Forward-Looking Statements	4

	Part I - Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and June 30, 2022 (Unaudited)	6
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2023 and June 30, 2022 (Unaudited)	7
	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 (Unaudited)	8
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and June 30, 2022 (Unaudited)	10
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and June 30, 2022 (Unaudited)	12
	Notes to Condensed Consolidated Financial Statements (Unaudited)	13
	(1) Business and Basis of Presentation	13
	(2) Revenue	13
	(3) Accumulated Other Comprehensive Loss	14
	(4) Net Income Per Share	15
	(5) Inventories, net	16
	(6) Capital Stock	16
	(7) Accrued Expenses and Other Current Liabilities	17
	(8) Long-Term Debt	18
	(9) Acquisition-Related Obligations	18
	(10) Asset Retirement Obligations	18
	(11) Fair Value of Financial Instruments and Fair Value Measurements	19
	(12) Income Taxes	20
	(13) Employee Benefit Plans	20
	(14) Related Party Transactions	21
	(15) Commitments and Contingencies	21
	(16) Segment Information	24
	(17) Subsequent Events	27
	Glossary	28
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
	Results of Operations	32
	Liquidity and Capital Resources	45
	Critical Accounting Policies and Estimates	49
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	50
Item 4.	Controls and Procedures	50


	Part II - Other Information
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	52

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements.” These statements, which involve risks and uncertainties, relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable and may also relate to our future prospects, developments and business strategies. We have used the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should” and similar terms and phrases, including references to assumptions, in this report to identify forward-looking statements, but these terms and phrases are not the exclusive means of identifying such statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those expressed in or implied by these forward-looking statements.

The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

•the financial performance of the company;

•our liquidity, results of operations and financial condition;

•our ability to generate sufficient cash or obtain financing to fund our business operations;

•depressed levels or declines in coal prices;

•railroad, barge, truck and other transportation availability, performance and costs;

•changes in domestic or international environmental laws and regulations, and court decisions, including those directly affecting our coal mining and production and those affecting our customers’ coal usage, including potential climate change initiatives;

•our ability to obtain or renew surety bonds on acceptable terms or maintain our current bonding status;

•worldwide market demand for coal and steel, including demand for U.S. coal exports, and competition in coal markets;

•attracting and retaining key personnel and other employee workforce factors, such as labor relations;

•our ability to pay dividends on our common stock and execute our share repurchase program;

•our ability to self-insure certain of our black lung obligations without a significant increase in required collateral;

•our ability to meet collateral requirements and fund employee benefit obligations;

•inflationary pressures on supplies and labor and significant or rapid increases in commodity prices;

•disruptions in delivery or changes in pricing from third-party vendors of key equipment and materials that are necessary for our operations, such as diesel fuel, steel products, explosives, tires and purchased coal;

•our ability to consummate financing or refinancing transactions, and other services, and the form and degree of these services available to us, which may be significantly limited by the lending, investment and similar policies of financial institutions and insurance companies regarding carbon energy producers and the environmental impacts of coal combustion;

•failures in performance, or non-performance, of services by third-party contractors, including contract mining and reclamation contractors;

•disruption in third-party coal supplies;

•cybersecurity attacks or failures, threats to physical security, extreme weather conditions or other natural disasters;

•the imposition or continuation of barriers to trade, such as tariffs;

•increased market volatility and uncertainty on worldwide markets and our customers as a result of developments in and around Ukraine and the consequent export controls and financial and economic sanctions;

•changes in, renewal or acquisition of, terms of and performance of customers under coal supply arrangements and the refusal by our customers to receive coal under agreed-upon contract terms;

•reductions or increases in customer coal inventories and the timing of those changes;

•our production capabilities and costs;

•our ability to obtain, maintain or renew any necessary permits or rights, and our ability to mine properties due to defects in title on leasehold interests;

•the effects of the COVID-19 pandemic on our operations and the world economy;

•inherent risks of coal mining, including those that are beyond our control;

•changes in, interpretations of, or implementations of domestic or international tax or other laws and regulations, including the Inflation Reduction Act of 2022 and its related regulations;

•our relationships with, and other conditions affecting, our customers, including the inability to collect payments from our customers if their creditworthiness declines;

•our indebtedness and potential future indebtedness;

•reclamation and mine closure obligations;

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•utilities and steel and coke producers switching to alternative energy sources such as natural gas, renewables and coal from basins where we do not operate;

•our assumptions concerning economically recoverable coal reserve estimates; and

•other factors, including the other factors discussed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section included elsewhere in this Quarterly Report on Form 10-Q and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections contained in our Annual Report on Form 10-K for the year ended December 31, 2022.

The list of factors identified above is not exhaustive. We caution readers not to place undue reliance on any forward-looking statements, which are based on information currently available to us and speak only as of the dates on which they are made. When considering these forward-looking statements, you should keep in mind the cautionary statements in this report. We do not undertake any responsibility to publicly revise these forward-looking statements to take into account events or circumstances that occur after the date of this report. Additionally, except as expressly required by federal securities laws, we do not undertake any responsibility to update you on the occurrence of any unanticipated events, which may cause actual results to differ from those expressed or implied by the forward-looking statements contained in this report.

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Part I - Financial Information

Item 1. Financial Statements

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues:
Coal revenues	$	853,807	$	1,334,258	$	1,760,505	$	2,403,996
Other revenues	4,564		2,154		9,101		4,380
Total revenues	858,371		1,336,412		1,769,606		2,408,376
Costs and expenses:
Cost of coal sales (exclusive of items shown separately below)	583,514		627,429		1,122,651		1,182,771
Depreciation, depletion and amortization	32,226		27,730		61,649		55,765
Accretion on asset retirement obligations	6,376		5,947		12,753		11,901
Amortization of acquired intangibles, net	2,192		5,747		4,389		11,495
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization shown separately above)	17,506		18,158		38,198		33,244
Total other operating loss (income):
Mark-to-market adjustment for acquisition-related obligations	—		4,208		—		13,569
Other income	(1,546)		(1,516)		(2,638)		(2,144)
Total costs and expenses	640,268		687,703		1,237,002		1,306,601
Income from operations	218,103		648,709		532,604		1,101,775
Other (expense) income:
Interest expense	(1,856)		(5,218)		(3,576)		(18,301)
Interest income	2,754		170		4,272		354
Equity loss in affiliates	(3,174)		(2,136)		(4,922)		(3,497)
Miscellaneous (expense) income, net	(874)		1,264		(243)		2,940
Total other expense, net	(3,150)		(5,920)		(4,469)		(18,504)
Income before income taxes	214,953		642,789		528,135		1,083,271
Income tax expense	(33,598)		(68,632)		(76,009)		(108,223)
Net income	$	181,355	$	574,157	$	452,126	$	975,048

Basic income per common share	$	12.63	$	31.24	$	30.52	$	52.77
Diluted income per common share	$	12.16	$	29.97	$	29.34	$	50.39

Weighted average shares – basic	14,362,072		18,380,114		14,814,099		18,476,534
Weighted average shares – diluted	14,910,633		19,158,848		15,410,994		19,349,209

Refer to accompanying Notes to Condensed Consolidated Financial Statements.

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Amounts in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	181,355	$	574,157	$	452,126	$	975,048
Other comprehensive loss, net of tax:
Employee benefit plans:
Amortization of and adjustments to employee benefit costs	(4,165)		(3,976)		(4,792)		(3,201)
Income tax expense	924		—		1,063		—
Total other comprehensive loss, net of tax	(3,241)		(3,976)		(3,729)		(3,201)
Total comprehensive income	$	178,114	$	570,181	$	448,397	$	971,847

Refer to accompanying Notes to Condensed Consolidated Financial Statements.

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in thousands, except share and per share data)


	June 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	312,400	$	301,906
Short-term investments	—		46,052
Trade accounts receivable, net of allowance for credit losses of $205 and $239 as of June 30, 2023 and December 31, 2022, respectively	432,014		407,210
Inventories, net	270,461		200,574
Short-term deposits	7,001		84,748
Short-term restricted cash	—		24,547
Prepaid expenses and other current assets	56,431		49,384
Total current assets	1,078,307		1,114,421
Property, plant, and equipment, net of accumulated depreciation and amortization of $525,470 and $491,186 as of June 30, 2023 and December 31, 2022, respectively	514,859		442,645
Owned and leased mineral rights, net of accumulated depletion and amortization of $89,403 and $77,333 as of June 30, 2023 and December 31, 2022, respectively	452,501		451,062
Other acquired intangibles, net of accumulated amortization of $45,429 and $53,719 as of June 30, 2023 and December 31, 2022, respectively	50,713		55,102
Long-term restricted investments	75,961		105,735
Long-term restricted cash	71,299		28,941
Deferred income taxes	9,422		11,378
Other non-current assets	104,770		103,195
Total assets	$	2,357,832	$	2,312,479
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	3,486	$	3,078
Trade accounts payable	106,216		106,037
Acquisition-related obligations – current	296		28,254
Accrued expenses and other current liabilities	185,738		265,256
Total current liabilities	295,736		402,625
Long-term debt	7,761		7,897
Workers’ compensation and black lung obligations	183,003		188,247
Pension obligations	106,844		110,836
Asset retirement obligations	146,817		142,048
Deferred income taxes	33,295		10,874
Other non-current liabilities	17,642		20,197
Total liabilities	791,098		882,724
Commitments and Contingencies (Note 15)
Stockholders’ Equity
Preferred stock - par value $0.01, 5.0 million shares authorized, none issued	—		—
Common stock - par value $0.01, 50.0 million shares authorized, 21.9 million issued and 13.9 million outstanding at June 30, 2023 and 21.7 million issued and 15.5 million outstanding at December 31, 2022	219		217
Additional paid-in capital	818,221		815,442
Accumulated other comprehensive loss	(15,891)		(12,162)
Treasury stock, at cost: 8.0 million shares at June 30, 2023 and 6.2 million shares at December 31, 2022	(949,202)		(649,061)

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Retained earnings	1,713,387		1,275,319
Total stockholders’ equity	1,566,734		1,429,755
Total liabilities and stockholders’ equity	$	2,357,832	$	2,312,479

Refer to accompanying Notes to Condensed Consolidated Financial Statements.

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in thousands)


	Six Months Ended June 30,
	2023		2022
Operating activities:
Net income	$	452,126	$	975,048
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	61,649		55,765
Amortization of acquired intangibles, net	4,389		11,495
Amortization of debt issuance costs and accretion of debt discount	1,060		7,231
Mark-to-market adjustment for acquisition-related obligations	—		13,569
Gain on disposal of assets	(5,578)		(2,172)
Accretion on asset retirement obligations	12,753		11,901
Employee benefit plans, net	6,463		232
Deferred income taxes	25,440		12,617
Stock-based compensation	6,679		2,583
Equity loss in affiliates	4,922		3,497
Other, net	(66)		567
Changes in operating assets and liabilities	(75,231)		(290,277)
Net cash provided by operating activities	494,606		802,056
Investing activities:
Capital expenditures	(129,111)		(70,012)
Proceeds from disposal of assets	6,839		2,511
Cash paid for business acquired	(11,919)		—
Purchases of investment securities	(158,835)		(127,831)
Sales and maturities of investment securities	236,650		60,945
Capital contributions to equity affiliates	(14,943)		(8,525)
Other, net	18		(4,237)
Net cash used in investing activities	(71,301)		(147,149)
Financing activities:

Principal repayments of long-term debt	(1,050)		(450,362)
Dividend and dividend equivalents paid	(92,649)		—
Common stock repurchases and related expenses	(301,201)		(194,950)
Proceeds from exercise of warrants	559		4,486
Other, net	(659)		(195)
Net cash used in financing activities	(395,000)		(641,021)
Net increase in cash and cash equivalents and restricted cash	28,305		13,886
Cash and cash equivalents and restricted cash at beginning of period	355,394		182,614
Cash and cash equivalents and restricted cash at end of period	$	383,699	$	196,500

Supplemental disclosure of noncash investing and financing activities:
Financing leases and capital financing - equipment	$	1,994	$	1,426
Accrued capital expenditures	$	13,948	$	10,703
Accrued common stock repurchases	$	6,642	$	5,197
Accrued dividend payable	$	9,541	$	6,977

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows.

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	As of June 30,
	2023		2022
Cash and cash equivalents	$	312,400	$	161,732
Short-term restricted cash	—		9,848
Long-term restricted cash	71,299		24,920
Total cash and cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows	$	383,699	$	196,500

Refer to accompanying Notes to Condensed Consolidated Financial Statements.

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

(Amounts in thousands)


	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive (Loss) Income		Treasury Stock at Cost		(Accumulated Deficit) Retained Earnings		Total Stockholders’ Equity
Balances, December 31, 2021	$	208	$	784,743	$	(58,503)	$	(107,800)	$	(71,739)	$	546,909
Net income	—		—		—		—		400,891		400,891
Other comprehensive income, net	—		—		775		—		—		775
Stock-based compensation, issuance of common stock for share vesting, and common stock reissuances	1		(391)		—		1,572		—		1,182
Exercise of stock options	—		891		—		—		—		891
Common stock repurchases and related expenses	—		—		—		(23,840)		—		(23,840)
Warrants exercises	1		3,038		—		—		—		3,039
Balances, March 31, 2022	$	210	$	788,281	$	(57,728)	$	(130,068)	$	329,152	$	929,847
Net income	—		—		—		—		574,157		574,157
Other comprehensive loss, net	—		—		(3,976)		—		—		(3,976)
Stock-based compensation, issuance of common stock for share vesting, and common stock reissuances	—		1,249		—		152		—		1,401
Exercise of stock options	—		11		—		—		—		11
Common stock repurchases and related expenses	—		—		—		(192,958)		—		(192,958)
Warrants exercises	6		18,062		—		—		—		18,068
Cash dividend and dividend equivalents declared ($0.375 per share)	—		—		—		—		(6,977)		(6,977)
Balances, June 30, 2022	$	216	$	807,603	$	(61,704)	$	(322,874)	$	896,332	$	1,319,573







Balances, December 31, 2022	$	217	$	815,442	$	(12,162)	$	(649,061)	$	1,275,319	$	1,429,755
Net income	—		—		—		—		270,771		270,771
Other comprehensive loss, net	—		—		(488)		—		—		(488)
Stock-based compensation, issuance of common stock for share vesting, and common stock reissuances	1		(3,444)		—		6,477		—		3,034

Common stock repurchases and related expenses	—		—		—		(148,973)		—		(148,973)
Warrants exercises	—		1,301		—		—		—		1,301
Cash dividend and dividend equivalents declared ($0.44 per share)	—		—		—		—		(6,825)		(6,825)
Balances, March 31, 2023	$	218	$	813,299	$	(12,650)	$	(791,557)	$	1,539,265	$	1,548,575
Net income	—		—		—		—		181,355		181,355
Other comprehensive loss, net	—		—		(3,241)		—		—		(3,241)
Stock-based compensation and issuance of common stock for share vesting	1		3,644		—		—		—		3,645

Common stock repurchases and related expenses	—		—		—		(157,645)		—		(157,645)
Warrants exercises	—		1,278		—		—		—		1,278
Cash dividend and dividend equivalents declared ($0.50 per share)	—		—		—		—		(7,233)		(7,233)
Balances, June 30, 2023	$	219	$	818,221	$	(15,891)	$	(949,202)	$	1,713,387	$	1,566,734

Refer to accompanying Notes to Condensed Consolidated Financial Statements.

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)

(1) Business and Basis of Presentation

Business

Alpha is a Tennessee-based mining company with operations across Virginia and West Virginia. With customers across the globe, high-quality reserves and significant port capacity, Alpha is a leading U.S. supplier of metallurgical coal products for the steel industry.

Basis of Presentation

Together, the condensed consolidated statements of operations, comprehensive income, balance sheets, cash flows and stockholders’ equity for the Company are referred to as the “Condensed Consolidated Financial Statements.” The Condensed Consolidated Financial Statements are also referenced across periods as “Condensed Consolidated Statements of Operations,” “Condensed Consolidated Statements of Comprehensive Income,” “Condensed Consolidated Balance Sheets,” “Condensed Consolidated Statements of Cash Flows,” and “Condensed Consolidated Statements of Stockholders’ Equity.”

The Condensed Consolidated Financial Statements include all wholly-owned subsidiaries’ results of operations for the three and six months ended June 30, 2023 and 2022. All significant intercompany transactions have been eliminated in consolidation.

The accompanying interim Condensed Consolidated Financial Statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for Form 10-Q. Such rules and regulations allow the omission of certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP as long as the financial statements are not misleading. In the opinion of management, these interim Condensed Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair presentation of the results for the periods presented. Results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or any other period. These interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Reclassifications

Certain immaterial amounts for the three and six months ended June 30, 2022 in the Condensed Consolidated Financials Statements and notes to the Condensed Consolidated Financials Statements have been recast to reclassify discontinued operations and present the related amounts within continuing operations as part of the All Other category.

Recent Accounting Guidance

There are no new pronouncements issued but not yet effective expected to have a material impact on the Company’s financial position, results of operations, or liquidity.

(2) Revenue

Disaggregation of Revenue from Contracts with Customers

The Company earns revenues primarily through the sale of coal produced at Company operations and coal purchased from third parties. The Company extracts, processes and markets met and thermal coal from deep and surface mines for sale to steel and coke producers, industrial customers, and electric utilities.

The Company has disaggregated revenue between met coal and thermal coal and export and domestic revenues which depicts the pricing and contract differences between the two. Export revenue generally is derived by spot or short-term contracts with pricing determined at the time of shipment or based on a market index, whereas domestic revenue is characterized by contracts that typically have a term of one year or longer and typically the pricing is fixed. The following tables disaggregate

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)

the Company’s coal revenues by product category and by market to depict how the nature, amount, timing, and uncertainty of the Company’s coal revenues and cash flows are affected by economic factors:


	Three Months Ended June 30, 2023
	Met Coal		Thermal Coal		Total
Export coal revenues	$	580,328	$	36,244	$	616,572
Domestic coal revenues	225,658		11,577		237,235
Total coal revenues	$	805,986	$	47,821	$	853,807


	Three Months Ended June 30, 2022
	Met Coal		Thermal Coal		Total
Export coal revenues	$	1,135,757	$	10,246	$	1,146,003
Domestic coal revenues	162,483		25,772		188,255
Total coal revenues	$	1,298,240	$	36,018	$	1,334,258


	Six Months Ended June 30, 2023
	Met Coal		Thermal Coal		Total
Export coal revenues	$	1,228,260	$	66,443	$	1,294,703
Domestic coal revenues	435,705		30,097		465,802
Total coal revenues	$	1,663,965	$	96,540	$	1,760,505


	Six Months Ended June 30, 2022
	Met Coal		Thermal Coal		Total
Export coal revenues	$	2,023,763	$	16,765	$	2,040,528
Domestic coal revenues	322,470		40,998		363,468
Total coal revenues	$	2,346,233	$	57,763	$	2,403,996

Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied as of June 30, 2023:


	Remainder of 2023		2024		2025		2026		2027		Total
Estimated coal revenues	$	86,842	$	37,250	$	—	$	—	$	—	$	124,092

(3) Accumulated Other Comprehensive Loss

The following tables summarize the changes to accumulated other comprehensive loss during the six months ended June 30, 2023 and 2022:


	Balance January 1, 2023		Other comprehensive loss before reclassifications		Amounts reclassified from accumulated other comprehensive loss		Balance June 30, 2023
Employee benefit costs	$	(12,162)	$	(2,825)	$	(904)	$	(15,891)

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)


	Balance January 1, 2022		Other comprehensive loss before reclassifications		Amounts reclassified from accumulated other comprehensive loss		Balance June 30, 2022
Employee benefit costs	$	(58,503)	$	(4,837)	$	1,636	$	(61,704)

The following table summarizes the amounts reclassified from accumulated other comprehensive loss and the Condensed Consolidated Statements of Operations line items affected by the reclassification during the three and six months ended June 30, 2023 and 2022:


Details about accumulated other comprehensive loss components	Amounts reclassified from accumulated other comprehensive loss								Affected line item in the Condensed Consolidated Statements of Operations
	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Employee benefit costs:
Amortization of net actuarial (gain) loss (1)	$	(535)	$	871	$	(1,162)	$	1,655	Miscellaneous (expense) income, net
Settlement (1)	—		(10)		—		(19)		Miscellaneous (expense) income, net
Total before income tax	$	(535)	$	861	$	(1,162)	$	1,636
Income tax	119		—		258		—		Income tax expense
Total, net of income tax	$	(416)	$	861	$	(904)	$	1,636

(1) These accumulated other comprehensive loss components are included in the computation of net periodic benefit costs for certain employee benefit plans. Refer to Note 13.

(4) Net Income Per Share

The number of shares used to calculate basic net income per common share is based on the weighted average number of the Company’s outstanding common shares during the respective period. The number of shares used to calculate diluted net income per common share is based on the number of common shares used to calculate basic net income per common share plus the dilutive effect of stock options and other stock-based instruments held by the Company’s employees and directors during the period, and the Company’s outstanding warrants. The dilutive effect of outstanding stock-based instruments is determined by application of the treasury stock method. The stock options and warrants become dilutive for diluted net income per common share calculations when the market price of the Company’s common stock exceeds the exercise price. Anti-dilution also occurs in periods of a net loss, and the dilutive impact of all warrants and share-based compensation awards are excluded.

For the three and six months ended June 30, 2023, 7,441 and 3,721 stock-based instruments, respectively, were excluded from the computation of dilutive net income per common share because they would have been anti-dilutive. For the three and six months ended June 30, 2022, no warrants, stock options, or other stock-based instruments were excluded from the computation of dilutive net income per common share because they would have been anti-dilutive. When applying the treasury stock method, anti-dilution generally occurs when the exercise prices or unrecognized compensation cost per share are higher than the Company’s average stock price during an applicable period.

The following table presents the net income per common share for the three and six months ended June 30, 2023 and 2022:

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Basic
Net income	$	181,355	$	574,157	$	452,126	$	975,048
Weighted average common shares outstanding - basic	14,362,072		18,380,114		14,814,099		18,476,534
Net income per common share - basic	$	12.63	$	31.24	$	30.52	$	52.77

Diluted
Weighted average common shares outstanding - basic	14,362,072		18,380,114		14,814,099		18,476,534
Dilutive effect of warrants	135,436		323,087		146,870		383,180
Dilutive effect of stock options	1,933		5,544		1,966		6,331
Dilutive effect of other stock-based instruments	411,192		450,103		448,059		483,164
Weighted average common shares outstanding - diluted	14,910,633		19,158,848		15,410,994		19,349,209
Net income per common share - diluted	$	12.16	$	29.97	$	29.34	$	50.39

(5) Inventories, net

Inventories, net consisted of the following:


	June 30, 2023		December 31, 2022
Raw coal	$	48,289	$	57,382
Saleable coal	155,788		91,474
Materials, supplies and other, net	66,384		51,718
Total inventories, net	$	270,461	$	200,574

(6) Capital Stock

Share Repurchase Program

On February 21, 2023, the Company’s Board of Directors (the “Board”) approved a $200,000 increase to the existing common share repurchase program that the Board adopted on March 4, 2022, bringing the total authorization to repurchase the Company’s stock to $1,200,000. As of June 30, 2023, the Company had repurchased an aggregate of 5,431,356 shares under the plan for an aggregate purchase price of approximately $809,320 (comprised of $809,157 of share repurchases and $163 of related fees). The Company has also accrued a stock repurchase excise tax of $2,627 related to the share repurchase program as of June 30, 2023, which is recorded in treasury stock at cost.

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)

Dividend Program

Pursuant to the dividend policy adopted by the Board on May 3, 2022, the Board declared the following quarterly cash dividends on the Company’s common stock during the six months ended June 30, 2023:


Dividend per share		Dividend Paid (1)		Declaration Date	Holders of Record Date	Payable Date
$	0.44	$	6,602	February 21, 2023	March 15, 2023	April 3, 2023
$	0.50	$	7,001	May 3, 2023	June 15, 2023	July 5, 2023

(1) Excludes dividend equivalents paid or accrued of $455 as of June 30, 2023. As of June 30, 2023, a related $7,001 balance was held on deposit to facilitate the dividend payment on July 5, 2023.

Refer to Note 17 for subsequent event disclosures related to the Company’s dividend program.

Warrants

On July 26, 2016, the Company issued 810,811 warrants, which are classified as equity instruments. Pursuant to the underlying warrants agreement, the warrants were exercisable for cash or on a cashless basis at any time until 5:00 p.m. Eastern Time on July 26, 2023, and no fractional shares were to be issued upon warrant exercises. Pursuant to the underlying warrants agreement, the exercise price was adjusted from $45.086 per share to $44.972 per share as of the March 15, 2023 dividend record date and to $44.820 per share as of the June 15, 2023 dividend record date, while the warrant share number remained unchanged at 1.20.

As of June 30, 2023, 130,445 warrants remained outstanding, with a total of 156,534 shares underlying the un-exercised warrants. For the three and six months ended June 30, 2023, the Company issued 35,068 and 72,472 shares of common stock, respectively, resulting from exercises of its warrants and, pursuant to the terms of the underlying warrants agreement, withheld 6,647 and 15,161 of the issued shares, respectively, in satisfaction of the warrant exercise price and in lieu of fractional shares, which were subsequently reclassified as treasury stock in the amount of $716 and $1,791, respectively.

As of June 30, 2022, 263,718 warrants were outstanding, with a total of 303,276 shares underlying the un-exercised warrants. For the three and six months ended June 30, 2022, the Company issued 553,296 and 618,157 shares of common stock, respectively, resulting from exercises of its warrants and, pursuant to the terms of the underlying warrants agreement, withheld 168,155 and 168,246 of the issued shares, respectively, in satisfaction of the warrant exercise price and in lieu of fractional shares, which were subsequently reclassified as treasury stock in the amounts of $16,644 and $16,651, respectively.

(7) Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:


	June 30, 2023		December 31, 2022
Wages and benefits	$	57,293	$	69,458
Workers’ compensation	11,651		11,651
Black lung	9,664		9,664
Taxes other than income taxes	34,672		24,959
Asset retirement obligations	36,146		36,963
Dividend payable	8,742		86,118
Income taxes payable	5,768		—
Freight accrual	10,248		7,181
Other	11,554		19,262
Total accrued expenses and other current liabilities	$	185,738	$	265,256

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)

(8) Long-Term Debt

Long-term debt consisted of the following:


	June 30, 2023		December 31, 2022
Notes payable and other	$	6,360	$	6,179

Financing leases	4,887		4,796

Total long-term debt	$	11,247	$	10,975
Less current portion	(3,486)		(3,078)
Long-term debt, net of current portion	$	7,761	$	7,897

Second Amended and Restated Asset-Based Revolving Credit Agreement

The Second Amended and Restated Asset-Based Revolving Credit Agreement (the “ABL Agreement”) includes a senior secured asset-based revolving credit facility (the “ABL Facility”). Under the ABL Facility, the Company may borrow cash or obtain letters of credit, on a revolving basis, in an aggregate amount of up to $155,000, of which no more than $150,000 may represent outstanding letters of credit ($125,000 on a committed basis and another $25,000 on an uncommitted cash collateralized basis) with the facility having a maturity date of December 6, 2024. As of June 30, 2023 and December 31, 2022, there were no outstanding borrowings under the ABL Facility. As of June 30, 2023 and December 31, 2022, the Company had $61,927 and $61,877 letters of credit outstanding under the ABL Facility, respectively.

The ABL Agreement, as amended, and related documents contain negative and affirmative covenants including certain financial covenants. The Company is in compliance with all covenants under these agreements as of June 30, 2023.

(9) Acquisition-Related Obligations

Acquisition-related obligations consisted of the following:


	June 30, 2023		December 31, 2022
Contingent Revenue Obligation	$	—	$	27,719
Environmental Settlement Obligation	296		535

Total acquisition-related obligations - current	$	296	$	28,254

Contingent Revenue Obligation

During the first quarter of 2023, the Company paid the final calculated payment pursuant to terms of the Contingent Revenue Obligation. Refer to Note 11 for further disclosures related to the fair value assignment and methods used.

(10) Asset Retirement Obligations

The following table summarizes the changes in asset retirement obligations for the six months ended June 30, 2023:


Total asset retirement obligations at December 31, 2022	$	179,011
Accretion for the period	12,753

Revisions in estimated cash flows	(31)
Expenditures for the period	(8,770)
Total asset retirement obligations at June 30, 2023	182,963
Less current portion (1)	(36,146)
Long-term portion	$	146,817

(1) Included within Accrued expenses and other current liabilities on the Company’s Condensed Consolidated Balance Sheets. Refer to Note 7.

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)

(11) Fair Value of Financial Instruments and Fair Value Measurements

The estimated fair values of financial instruments are determined based on relevant market information. These estimates involve uncertainty and cannot be determined with precision.

The carrying amounts for cash and cash equivalents, trade accounts receivable, net, prepaid expenses and other current assets, restricted cash, deposits, trade accounts payable, accrued expenses and other current liabilities, and environmental settlement obligations approximate fair value as of June 30, 2023 and December 31, 2022 due to the short maturity of these instruments.

The following tables set forth by level, within the fair value hierarchy, the Company’s financial and non-financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. Financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the determination of fair value for assets and liabilities and their placement within the fair value hierarchy levels.


	June 30, 2023
	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Trading securities (1)	$	75,961	$	—	$	75,961	$	—

(1) Classified as Long-term restricted investments on the Company’s Condensed Consolidated Balance Sheets.


	December 31, 2022
	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Contingent Revenue Obligation	$	27,719	$	—	$	—	$	27,719
Trading securities (1)	$	151,787	$	—	$	151,787	$	—

(1) Includes $46,052 classified as Short-term investments and $105,735 classified as Long-term restricted investments on the Company’s Condensed Consolidated Balance Sheets.

The following tables are reconciliations of the financial and non-financial assets and liabilities that were accounted for at fair value on a recurring basis and that were categorized within Level 3 of the fair value hierarchy:


	December 31, 2022		Payments		Loss (Gain) Recognized in Earnings		Transfer In (Out) of Level 3 Fair Value Hierarchy		June 30, 2023
Contingent Revenue Obligation	$	27,719	$	(27,719)	$	—	$	—	$	—


	December 31, 2021		Payments		Loss (Gain) Recognized in Earnings (1)		Transfer In (Out) of Level 3 Fair Value Hierarchy		June 30, 2022
Contingent Revenue Obligation	$	35,005	$	(16,166)	$	13,569	$	—	$	32,408

(1) The loss recognized in earnings resulted primarily from an increase in forecasted future revenue as of June 30, 2022.

The following methods and assumptions were used to estimate the fair values of the assets and liabilities in the tables above:

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)

Level 2 Fair Value Measurements

Trading Securities - Typically includes certificates of deposit, corporate fixed income, and U.S. government securities. The fair values are obtained from a third-party pricing service provider. The fair values provided by the pricing service provider are based on observable market inputs including credit spreads and broker-dealer quotes, among other inputs. The Company classifies the prices obtained from the pricing services within Level 2 of the fair value hierarchy because the underlying inputs are directly observable from active markets. However, the pricing models used entail a certain amount of subjectivity and therefore differing judgments in how the underlying inputs are modeled could result in different estimates of fair value.

Level 3 Fair Value Measurements

Contingent Revenue Obligation - The fair value of the Contingent Revenue Obligation was estimated using a Black-Scholes pricing model. The inputs included in the Black-Scholes pricing model are the Company’s forecasted future revenue, the stated royalty rate, the remaining periods in the obligation, annual risk-free interest rate based on the U.S. Constant Maturity Treasury Curve and annualized volatility. The annualized volatility was calculated by observing volatilities for comparable companies with adjustments for the Company's size and leverage. As the royalty period ended on December 31, 2022, the fair value of the remaining obligation as of that date represents the actual final calculated payment made during the first quarter of 2023. Refer to Note 9 for additional information.

(12) Income Taxes

For the six months ended June 30, 2023, the Company recorded income tax expense of $76,009 on income before income taxes of $528,135. The income tax expense differs from the expected statutory amount primarily due to the permanent impact of percentage depletion and foreign-derived intangible income deductions, partially offset by the impact of state income taxes, net of federal impact. For the six months ended June 30, 2022, the Company recorded income tax expense of $108,223 on income before income taxes of $1,083,271. The income tax expense differs from the expected statutory amount primarily due to the decrease in the valuation allowance and the permanent impact of percentage depletion and foreign-derived intangible income deductions, partially offset by the impact of state income taxes, net of federal impact.

(13) Employee Benefit Plans

The components of net periodic benefit cost (credit) other than the service cost component for black lung are included in the line item miscellaneous income, net in the Condensed Consolidated Statements of Operations.

Pension

The following table details the components of the net periodic benefit cost (credit) for pension obligations:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Interest cost	$	6,028	$	4,006	$	11,986	$	7,990
Expected return on plan assets	(5,514)		(7,181)		(10,998)		(14,366)
Amortization of net actuarial loss	228		571		365		1,055

Net periodic benefit cost (credit)	$	742	$	(2,604)	$	1,353	$	(5,321)

During the three months ended June 30, 2023, an annual census data actuarial revaluation of pension obligations was performed, which resulted in an increase in the liability for pension obligations of approximately $3,630 with the offset to accumulated other comprehensive loss and a slight increase in net periodic benefit cost to be recognized subsequent to the revaluation date. An annual census data actuarial revaluation of pension obligations was also performed during the three months ended June 30, 2022, which resulted in an increase in the liability for pension obligations of approximately $4,837 with the offset to accumulated other comprehensive loss and a slight decrease in net periodic benefit credit to be recognized subsequent to the revaluation date.

Black Lung

The following table details the components of the net periodic benefit cost for black lung obligations:

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Service cost	$	513	$	660	$	1,026	$	1,321
Interest cost	1,165		680		2,330		1,360
Expected return on plan assets	(13)		(13)		(26)		(26)
Amortization of net actuarial (gain) loss	(708)		315		(1,416)		629
Net periodic benefit cost	$	957	$	1,642	$	1,914	$	3,284

Self-insured Medical Plan

The Company is self-insured for health benefit coverage for all of its active employees. Estimated liabilities for health and medical claims are recorded based on the Company’s historical experience and include a component for incurred but not paid claims. During the three months ended June 30, 2023 and 2022 the Company incurred total expenses of $21,104 and $16,696, respectively, and during the six months ended June 30, 2023 and 2022, the Company incurred total expenses of $39,826 and $31,010, respectively, which primarily include claims processed and an estimate for claims incurred but not paid.

(14) Related Party Transactions

There were no material related party transactions for the six months ended June 30, 2023 or 2022.

(15) Commitments and Contingencies

(a) General

Estimated losses from loss contingencies are accrued by a charge to income when information available indicates that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated.

If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the Condensed Consolidated Financial Statements when it is at least reasonably possible that a loss may be incurred and that the loss could be material.

(b) Commitments and Contingencies

Commitments

The Company leases coal mining and other equipment under long-term financing and operating leases with varying terms. In addition, the Company leases mineral interests and surface rights from landowners under various terms and royalty rates.

Coal royalty expense was $45,523 and $72,627 for the three months ended June 30, 2023 and 2022, respectively. Coal royalty expense was $97,024 and $129,970 for the six months ended June 30, 2023 and 2022, respectively.

Contingencies

Extensive regulation of the impacts of mining on the environment and of maintaining workplace safety has had, and is expected to continue to have, a significant effect on the Company’s costs of production and results of operations. Further regulations, legislation or litigation in these areas may also cause the Company’s sales or profitability to decline by increasing costs or by hindering the Company’s ability to continue mining at existing operations or to permit new operations.

During the normal course of business, contract-related matters arise between the Company and its customers. When a loss related to such matters is considered probable and can reasonably be estimated, the Company records a liability.

For the three months ended June 30, 2023 and 2022, the Company purchased and sold 206 and 258 tons, respectively, totaling $7,829 and $9,936, respectively, under the Cumberland Back-to-Back Coal Supply Agreements. For the six months

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)

ended June 30, 2023 and 2022, the Company purchased and sold 399 and 677 tons, respectively, totaling $15,170 and $26,121, respectively, under the Cumberland Back-to-Back Coal Supply Agreements. As of June 30, 2023, the Cumberland Back-to-Back Coal Supply Agreements have been fully performed.

In the normal course of business, the Company is a party to certain guarantees and financial instruments with off-balance sheet risk, such as bank letters of credit, performance or surety bonds, and other guarantees and indemnities related to the obligations of affiliated entities which are not reflected in the Company’s Condensed Consolidated Balance Sheets. However, the underlying liabilities that they secure, such as asset retirement obligations, workers’ compensation liabilities, and royalty obligations, are reflected in the Company’s Condensed Consolidated Balance Sheets.

The Company is required to provide financial assurance in order to perform the post-mining reclamation required by its mining permits, pay workers’ compensation claims under workers’ compensation laws in various states, pay federal black lung benefits, and perform certain other obligations. In order to provide the required financial assurance, the Company generally uses surety bonds for post-mining reclamation and workers’ compensation obligations. The Company can also use bank letters of credit to collateralize certain obligations.

As of June 30, 2023, the Company had $61,927 letters of credit outstanding under the ABL Agreement.

As of June 30, 2023, the Company had outstanding surety bonds with a total face amount of $164,997 to secure various obligations and commitments. To secure the Company’s reclamation-related obligations, the Company has $35,416 of collateral in the form of restricted cash and restricted investments supporting these obligations as of June 30, 2023.

The Company meets frequently with its surety providers and has discussions with certain providers regarding the extent of and the terms of their participation in the program. These discussions may cause the Company to shift surety bonds between providers or to alter the terms of their participation in our program. To the extent that surety bonds become unavailable or the Company’s surety bond providers require additional collateral, the Company would seek to secure its obligations with letters of credit, cash deposits or other suitable forms of collateral. The Company’s failure to maintain, or inability to acquire, surety bonds or to provide a suitable alternative would have a material adverse effect on its liquidity. These failures could result from a variety of factors, including the lack of availability, higher cost or unfavorable market terms of new surety bonds, and the exercise by third-party surety bond issuers of their right to refuse to renew the surety.

Amounts included in restricted cash provide collateral to secure the following obligations:


	June 30, 2023		December 31, 2022
Workers’ compensation and black lung obligations	$	60,419	$	15,334
Reclamation-related obligations	603		3,220
Financial payments and other performance obligations	10,277		10,387
Contingent Revenue Obligation escrow	—		24,547
Total restricted cash	71,299		53,488
Less current portion	—		(24,547)
Restricted cash, net of current portion	$	71,299	$	28,941

Amounts included in restricted investments provide collateral to secure the following obligations:


	June 30, 2023		December 31, 2022
Workers’ compensation and black lung obligations	$	38,741	$	72,136
Reclamation-related obligations	34,813		31,718
Financial payments and other performance obligations	2,407		1,881
Total restricted investments (1)	$	75,961	$	105,735

(1) Classified as long-term trading securities as of June 30, 2023 and December 31, 2022.

Amounts included in deposits provide collateral to secure the following obligations:

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)


	June 30, 2023		December 31, 2022

Reclamation-related obligations	$	—	$	102
Financial payments and other performance obligations	—		391
Other operating agreements (1)	7,871		85,618
Total deposits	7,871		86,111
Less current portion	(7,001)		(84,748)
Total deposits, net of current portion (2)	$	870	$	1,363

(1) Included $7,001 and $84,748 related to the Company’s dividend payable as of June 30, 2023 and December 31, 2022, respectively. Refer to Note 6 for additional information.

(2) Included within Other non-current assets on the Company’s Condensed Consolidated Balance Sheets.

DCMWC Reauthorization Process

In July 2019, the U.S. Department of Labor (Division of Coal Mine Workers’ Compensation or “DCMWC”) began implementing a new authorization process for all self-insured coal mine operators. As requested by the DCMWC, the Company filed an application and supporting documentation for reauthorization to self-insure certain of its black lung obligations in October 2019. As a result of this application, the DCMWC notified the Company in a letter dated February 21, 2020 that the Company was reauthorized to self-insure certain of its black lung obligations for a period of one-year from February 21, 2020. The DCMWC reauthorization is contingent, however, upon the Company’s providing collateral of $65,700 to secure certain of its black lung obligations. This proposed collateral requirement is an increase from the approximate $2,600 in collateral that the Company currently provides to secure these self-insured black lung obligations. The reauthorization process provided the Company with the right to appeal the security determination in writing within 30 days of the date of the notification, which appeal period the DCMWC agreed to extend to May 22, 2020. The Company exercised this right of appeal in connection with the substantial increase in the amount of required collateral. In February 2021, the U.S. Department of Labor (“DOL”) withdrew its Federal Register notice seeking comments on its bulletin describing its new method of calculating collateral requirements. The Department removed the bulletin from its website in May 2021. On February 10, 2022, a telephone conference was held with DCMWC and DOL decision makers wherein the Company presented facts and arguments in support of its appeal. No ruling has been made on the appeal, but during the call the Company indicated that it would be willing to allocate an additional $10,000 in collateral. If the Company’s appeal is unsuccessful, the Company may be required to provide additional letters of credit to receive the self-insurance reauthorization from the DCMWC or alternatively insure these black lung obligations through a third-party provider that would likely also require the Company to provide additional collateral. In January 2023, the DOL proposed for public comment new regulations which, if adopted, would substantially increase the collateral required to secure self-insured federal black lung obligations. Under the proposed 120% minimum collateral requirement, the Company estimates it could be required to provide approximately $80,000 to $100,000 of collateral to secure certain of its black lung obligations. The DOL has indicated that it expects that some form of these new regulations could go into effect in the fourth quarter of 2023. A significant increase in these collateral obligations would have a materially adverse effect on the Company’s liquidity.

(d) Legal Proceedings

The Company is party to legal proceedings from time to time. These proceedings, as well as governmental examinations, could involve various business units and a variety of claims including, but not limited to, contract disputes, personal injury claims, property damage claims (including those resulting from blasting, trucking and flooding), environmental and safety issues, securities-related matters and employment matters. While some legal matters may specify the damages claimed by the plaintiffs, many seek an unquantified amount of damages. Even when the amount of damages claimed against the Company or its subsidiaries is stated, (i) the claimed amount may be exaggerated or unsupported; (ii) the claim may be based on a novel legal theory or involve a large number of parties; (iii) there may be uncertainty as to the likelihood of a class being certified or the ultimate size of the class; (iv) there may be uncertainty as to the outcome of pending appeals or motions; and/or (v) there may be significant factual issues to be resolved. As a result, if such legal matters arise in the future, the Company may be unable to estimate a range of possible loss for matters that have not yet progressed sufficiently through discovery and the development of important factual information and legal issues. The Company records accruals based on an estimate of the ultimate outcome of these matters, but these estimates can be difficult to determine and involve significant judgment.

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)

(16) Segment Information

The Company extracts, processes and markets met and thermal coal from deep and surface mines for sale to steel and coke producers, industrial customers, and electric utilities. The Company conducts mining operations only in the United States with mines in Central Appalachia (“CAPP”). The Company has one reportable segment: Met, which consists of five active mines and two preparation plants in Virginia, sixteen active mines and five preparation plants in West Virginia, as well as expenses associated with certain idled/closed mines.

In addition to the one reportable segment, the All Other category includes general corporate overhead and corporate assets and liabilities, the former CAPP - Thermal operations consisting of one active mine and one preparation plant in West Virginia, and the elimination of certain intercompany activity, as well as expenses associated with certain idled/closed mines. Certain immaterial amounts as of and for the three and six months ended June 30, 2022 in the Condensed Consolidated Financials Statements and notes to the Condensed Consolidated Financials Statements have been recast to reclassify discontinued operations and present the related amounts within continuing operations as part of the All Other category.

Reportable segment operating results are regularly reviewed by the Chief Operating Decision Maker (the “CODM”), who is the Chief Executive Officer of the Company.

Segment operating results and capital expenditures for the three and six months ended June 30, 2023 and 2022 were as follows:


	Three Months Ended June 30, 2023
	Met		All Other		Consolidated
Total revenues	$	837,800	$	20,571	$	858,371
Depreciation, depletion, and amortization	$	31,649	$	577	$	32,226
Amortization of acquired intangibles, net	$	2,192	$	—	$	2,192
Adjusted EBITDA	$	269,095	$	(10,601)	$	258,494
Capital expenditures	$	51,962	$	2,901	$	54,863


	Three Months Ended June 30, 2022
	Met		All Other		Consolidated
Total revenues	$	1,319,941	$	16,471	$	1,336,412
Depreciation, depletion, and amortization	$	27,203	$	527	$	27,730
Amortization of acquired intangibles, net	$	4,795	$	952	$	5,747
Adjusted EBITDA	$	706,232	$	(13,362)	$	692,870
Capital expenditures	$	40,059	$	1,807	$	41,866


	Six Months Ended June 30, 2023
	Met		All Other		Consolidated
Total revenues	$	1,727,738	$	41,868	$	1,769,606
Depreciation, depletion, and amortization	$	60,528	$	1,121	$	61,649
Amortization of acquired intangibles, net	$	4,389	$	—	$	4,389
Adjusted EBITDA	$	631,103	$	(18,194)	$	612,909
Capital expenditures	$	123,576	$	5,535	$	129,111

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)


	Six Months Ended June 30, 2022
	Met		All Other		Consolidated
Total revenues	$	2,375,630	$	32,746	$	2,408,376
Depreciation, depletion, and amortization	$	54,263	$	1,502	$	55,765
Amortization of acquired intangibles, net	$	9,591	$	1,904	$	11,495
Adjusted EBITDA	$	1,219,533	$	(23,002)	$	1,196,531
Capital expenditures	$	67,356	$	2,656	$	70,012

The following tables present a reconciliation of net income (loss) to Adjusted EBITDA for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30, 2023
	Met		All Other		Consolidated
Net income (loss)	$	231,394	$	(50,039)	$	181,355
Interest expense	198		1,658		1,856
Interest income	(86)		(2,668)		(2,754)
Income tax expense	—		33,598		33,598
Depreciation, depletion and amortization	31,649		577		32,226
Non-cash stock compensation expense	27		3,618		3,645

Accretion on asset retirement obligations	3,721		2,655		6,376
Amortization of acquired intangibles, net	2,192		—		2,192
Adjusted EBITDA	$	269,095	$	(10,601)	$	258,494


	Three Months Ended June 30, 2022
	Met		All Other		Consolidated
Net income (loss)	$	670,801	$	(96,644)	$	574,157
Interest expense	43		5,175		5,218
Interest income	—		(170)		(170)
Income tax expense	—		68,632		68,632
Depreciation, depletion and amortization	27,203		527		27,730
Non-cash stock compensation expense	—		1,401		1,401
Mark-to-market adjustment - acquisition-related obligations	—		4,208		4,208
Accretion on asset retirement obligations	3,390		2,557		5,947
Amortization of acquired intangibles, net	4,795		952		5,747
Adjusted EBITDA	$	706,232	$	(13,362)	$	692,870

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)


	Six Months Ended June 30, 2023
	Met		All Other		Consolidated
Net income (loss)	$	558,608	$	(106,482)	$	452,126
Interest expense	363		3,213		3,576
Interest income	(274)		(3,998)		(4,272)
Income tax expense	—		76,009		76,009
Depreciation, depletion and amortization	60,528		1,121		61,649
Non-cash stock compensation expense	46		6,633		6,679
Accretion on asset retirement obligations	7,443		5,310		12,753
Amortization of acquired intangibles, net	4,389		—		4,389
Adjusted EBITDA	$	631,103	$	(18,194)	$	612,909


	Six Months Ended June 30, 2022
	Met		All Other		Consolidated
Net income (loss)	$	1,148,968	$	(173,920)	$	975,048
Interest expense	92		18,209		18,301
Interest income	(172)		(182)		(354)
Income tax expense	—		108,223		108,223
Depreciation, depletion and amortization	54,263		1,502		55,765
Non-cash stock compensation expense	3		2,580		2,583
Mark-to-market adjustment - acquisition-related obligations	—		13,569		13,569
Accretion on asset retirement obligations	6,788		5,113		11,901
Amortization of acquired intangibles, net	9,591		1,904		11,495
Adjusted EBITDA	$	1,219,533	$	(23,002)	$	1,196,531

No asset information has been disclosed as the CODM does not regularly review asset information by reportable segment.

The Company markets produced, processed and purchased coal to customers in the United States and in international markets. Revenue is tracked within the Company’s accounting records based on the product destination. The following tables present additional information on our revenues and top customers:


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Total coal revenues	$	853,807		$	1,334,258		$	1,760,505		$	2,403,996
Total revenues	$	858,371		$	1,336,412		$	1,769,606		$	2,408,376
Export coal revenues	$	616,572		$	1,146,003		$	1,294,703		$	2,040,528
Export coal revenues as % of total coal revenues	72		%	86		%	74		%	85		%
Countries with export coal revenue exceeding 10% of total revenues	India, Brazil			India			India, Brazil			India
Top customer as % of total revenues	12		%	33		%	12		%	31		%
Top 10 customers as % of total revenues	71		%	77		%	72		%	74		%
Number of customers exceeding 10% of total revenues	2			1			4			1


	As of June 30,
	2023	2022
Number of customers exceeding 10% of total trade accounts receivable, net	2	2

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ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands except share and per share data)

(17) Subsequent Events

At 5:00 pm Eastern Time on July 26, 2023 the Company’s Series A Warrants expired pursuant to their terms. Refer to Note 6 for additional information related to the Company’s warrants.

On August 2, 2023, the Board declared a quarterly cash dividend of $0.50 per share which will be payable on October 3, 2023 for stockholders of record as of September 15, 2023. Also on August 2, 2023, the Board determined to end the Company’s fixed dividend program following the quarterly dividend expected to be declared and paid in the fourth quarter of 2023. The Board intends to reallocate funds to the share repurchase program that would have otherwise been used to pay future quarterly dividends. The decision to declare and pay a cash dividend in the fourth quarter of 2023 will be made by the Board and will depend on the Company’s earnings, financial condition and other relevant factors. Refer to Note 6 for information regarding the Company’s dividend program.

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GLOSSARY

Alpha. Alpha Metallurgical Resources, Inc. (the “Company”) (previously named Contura Energy, Inc.).

Ash. Impurities consisting of iron, alumina and other incombustible matter that are contained in coal. Since ash increases the weight of coal, it adds to the cost of handling and can affect the burning characteristics of coal.

Bituminous coal. Coal used primarily to generate electricity and to make coke for the steel industry with a heat value ranging between 10,500 and 15,500 BTU’s per pound.

British Thermal Unit or BTU. A measure of the thermal energy required to raise the temperature of one pound of pure liquid water one degree Fahrenheit at the temperature at which water has its greatest density (39 degrees Fahrenheit).

Central Appalachia or CAPP. Coal producing area in eastern Kentucky, Virginia, southern West Virginia and a portion of eastern Tennessee.

Coal reserves. The economically mineable part of a measured or indicated coal resource, which includes diluting materials and allowances for losses that may occur when coal is mined or extracted.

Coal resources. Coal deposits in such form, quality, and quantity that there are reasonable prospects for economic extraction.

Coal seam. Coal deposits occur in layers. Each layer is called a “seam.”

Coke. A hard, dry carbon substance produced by heating coal to a very high temperature in the absence of air. Coke is used in the manufacture of iron and steel. Its production results in a number of useful byproducts.

Cumberland Back-to-Back Coal Supply Agreement. Certain agreements with Iron Senergy under which Iron Senergy will sell to the Company all of the coal that the Company is obligated to sell to customers under Cumberland coal supply agreements (“Cumberland CSAs”) which existed as of the transaction closing date but did not transfer to Iron Senergy at closing (each, a “Cumberland Back-to-Back Coal Supply Agreement”). Each Cumberland Back-to-Back Coal Supply Agreement has economic terms identical to, but offsetting, the related Cumberland CSA. If a Cumberland customer subsequently consents to assign a Cumberland CSA to Iron Senergy after closing, the related Cumberland CSA will immediately and automatically transfer to Iron Senergy and the related Cumberland Back-to-Back Coal Supply Agreements executed by the parties shall thereupon terminate as set forth therein.

ESG. Environmental, social and governance sustainability criteria.

Indicated coal resource. That part of a coal resource for which quantity and quality are estimated on the basis of adequate geological evidence and sampling sufficient to establish geological and quality continuity with reasonable certainty.

In situ coal resources. Coal resources stated on an in-seam dry basis (excluding surface and inherent moisture) with no consideration for dilution or losses that may occur when coal is mined or extracted.

Measured coal resource. That part of a coal resource for which quantity and quality are estimated on the basis of conclusive geological evidence and sampling sufficient to test and confirm geological and quality continuity.

Merger. Merger with ANR, Inc. and Alpha Natural Resources Holdings, Inc. completed on November 9, 2018.

Metallurgical coal. The various grades of coal suitable for carbonization to make coke for steel manufacture. Also known as “met” coal, its quality is primarily differentiated based on volatility or its percent of volatile matter. Met coal typically has a particularly high BTU but low ash and sulfur content.

MSHA. The United States Mine Safety and Health Administration, which has responsibility for developing and enforcing safety and health rules for U.S. mines.

Operating Margin. Coal revenues less cost of coal sales.

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Preparation plant. A preparation plant is a facility for crushing, sizing and washing coal to remove impurities and prepare it for use by a particular customer. The washing process has the added benefit of removing some of the coal’s sulfur content. A preparation plant is usually located on a mine site, although one plant may serve several mines.

Probable mineral reserve. The economically mineable part of an indicated and, in some cases, a measured coal resource.

Productivity. As used in this report, refers to clean metric tons of coal produced per underground man hour worked, as published by the MSHA.

Proven mineral reserve. The economically mineable part of a measured coal resource.

Reclamation. The process of restoring land and the environment to their original state following mining activities. The process commonly includes “recontouring” or reshaping the land to its approximate original appearance, restoring topsoil and planting native grass and ground covers. Reclamation operations are usually underway before the mining of a particular site is completed. Reclamation is closely regulated by both state and federal law.

Roof. The stratum of rock or other mineral above a coal seam; the overhead surface of a coal working place.

Sulfur. One of the elements present in varying quantities in coal that contributes to environmental degradation when coal is burned. Sulfur dioxide is produced as a gaseous by-product of coal combustion.

Surface mine. A mine in which the coal lies near the surface and can be extracted by removing the covering layer of soil.

Thermal coal. Coal used by power plants and industrial steam boilers to produce electricity, steam or both. It generally is lower in BTU heat content and higher in volatile matter than metallurgical coal.

Tons. A “short” or net ton is equal to 2,000 pounds. A “long” or British ton is equal to 2,240 pounds; a “metric” ton (or “tonne”) is approximately 2,205 pounds. Tonnage amounts in this report are stated in short tons, unless otherwise indicated.

Underground mine. Also known as a “deep” mine. Usually located several hundred feet below the earth’s surface, an underground mine’s coal is removed mechanically and transferred by shuttle car and conveyor to the surface.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides a narrative of our results of operations and financial condition for the three and six months ended June 30, 2023 and 2022. The following discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our Consolidated Financial Statements and related notes and risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2022.

The following discussion includes forward-looking statements about our business, financial condition and results of operations, including discussions about management’s expectations for our business. These statements represent projections, beliefs and expectations based on current circumstances and conditions and in light of recent events and trends, and you should not construe these statements either as assurances of performance or as promises of a given course of action. Instead, various known and unknown factors are likely to cause our actual performance and management’s actions to vary, and the results of these variances may be both material and adverse. See “Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A. Risk Factors.”

Market Overview

Metallurgical coal markets continue to soften as economies across the globe attempt to find stable footing. As the Russian war in Ukraine persists, inflationary impacts remain, and monetary tightening continues in the United States and Europe, economic indicators, like manufacturing production data, indicate that many regions of the world are still contracting instead of expanding. The recovery growth expected following China’s reopening from its zero-COVID policy has instead been muted, and China’s June producer price index continued its multi-month decline, fueling concerns of economic weakness and possible deflation in the world’s second-largest economy and a significant consumer of steel.

In the second quarter, metallurgical coal indices remained volatile, continuing the downward trajectory of recent quarters. Each of the four indices Alpha closely monitors decreased by 20 percent or more over the course of the second quarter, with all but the Australian Premium Low Volatile index continuing to decline following the quarter close. The Australian Premium Low Volatile index decreased from $300.00 per metric ton at the start of the quarter to $233.00 per ton on June 30, 2023. The U.S. East Coast Low Volatile index decreased from $284.00 per metric ton at the beginning of April to $227.00 per metric ton at the end of the quarter. The U.S. East Coast High Volatile A index dropped from $284.00 per metric ton at the start of the second quarter to $216.00 per metric ton at the end of June. During the second quarter, the U.S. East Coast High Volatile B index decreased from $265.00 per metric ton on April 1, 2023 to $206.00 per metric ton on June 30, 2023. Over the course of July, these three U.S. East Coast indices have further softened slightly from their quarter-close levels, with the Low Volatile, High Volatile A and High Volatile B indices measuring $220.00, $210.00, and $197.00 per ton, respectively, as of July 25, 2023. The Australian Premium Low Volatile had increased from its quarter-close level to $237.00 per metric ton on the same date.

The world Purchasing Managers’ Index (“PMI”) declined from 49.6 in May to a six-month low of 48.8 in June 2023. PMI for Europe dropped to 43.4 in June from 44.8 in May, marking its twelfth consecutive month in contractionary territory. The United States PMI fell to 46.3 in June from a May level of 48.4 and suppressed demand in Brazil brought down its PMI to 46.6 in June from 47.1 in May. China’s slowing of growth and month-over-month declines continued, with June’s PMI at 50.5, down from 50.9 in May. India, a key market for Alpha, marked two years of consecutive above-50.0-level PMI with their June PMI of 57.8, which was down slightly from May’s 58.7. India’s continued expansion represents a consistently bright spot of manufacturing growth that stands in contrast to contractionary levels from many other countries around the globe.

As compiled by the World Steel Association (“WSA”), June 2023 global crude steel production of 158.8 million metric tons represented a slight 0.1% decrease from June 2022. While the overall market was down, the two largest steel producing countries, China and India, both had increases in their production levels. China produced 91.1 million metric tons, 0.4% more than its year-ago June production amount, and India produced 11.2 million metric tons, an increase of 12.9%. The Asia and Oceania region, which contains both India and China, saw an increase of 0.8% with production of 119.7 million metric tons. Three other regions had increases over the prior year for the month of June: Africa (11.5%), Middle East (9.4%), and Russia (5.2%). These increases were offset by decreases across the other four regions. The European Union and South America both had double-digit decreases, 11.1% and 12.4%, respectively. The other two regions, which had single-digit percentage declines, were North America with a 0.5% decline and Europe - Other with a 1.8% decline. The United States had an increase of 0.5% to 6.8 million metric tons produced compared to June 2022.

The American Iron and Steel Institute’s capacity utilization rate for U.S. steel mills was 76.6% for the week ending July 22, 2023. This is down in comparison to the year-ago period of the week ended July 22, 2022, when the capacity utilization rate was 78.1%.

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In the seaborne thermal market, the API2 index declined significantly in the second quarter, moving from $146.55 per metric ton on April 1, 2023 to $122.05 per metric ton as of June 30, 2023.

Business Overview

We are a Tennessee-based mining company with operations across Virginia and West Virginia. With customers across the globe, high-quality reserves and significant port capacity, we are a leading supplier of metallurgical coal products to the steel industry. We operate high-quality, cost-competitive coal mines across the CAPP coal basin. As of June 30, 2023, our operations consisted of twenty-two active mines and eight coal preparation and load-out facilities, with approximately 3,980 employees. We produce, process, and sell met coal and thermal coal. We also sell coal produced by others, some of which is processed and/or blended with coal produced from our mines prior to resale, with the remainder purchased for resale. As of December 31, 2022, we had 336.7 million tons of reserves, which included 322.7 million tons of proven and probable metallurgical reserves and 14.0 million tons of proven and probable thermal reserves. Additionally, we had approximately 527.3 million tons of in situ bituminous coal resources.

For the three months ended June 30, 2023 and 2022, sales of met coal were 3.9 million tons and 3.8 million tons, respectively, and accounted for approximately 90% and 87%, respectively, of our coal sales volume. Sales of thermal coal were 0.4 million tons and 0.5 million tons, respectively, and accounted for approximately 10% and 13%, respectively, of our coal sales volume. For the six months ended June 30, 2023 and 2022, sales of met coal were 7.4 million tons and 7.3 million tons, respectively, and accounted for approximately 90% and 88%, respectively, of our coal sales volume. Sales of thermal coal were 0.8 million tons and 1.0 million tons, respectively, and accounted for approximately 10% and 12%, respectively, of our coal sales volume.

Our sales of met coal were made primarily to steel companies in the northeastern and midwestern regions of the United States and in several countries in Asia, Europe, and the Americas. Our sales of thermal coal were made primarily to large utilities and industrial customers both in the United States and across the world. For the three months ended June 30, 2023 and 2022 approximately 72% and 86%, respectively, of our coal revenues were derived from coal sales made to customers outside the United States. For the six months ended June 30, 2023 and 2022 approximately 74% and 85%, respectively, of our coal revenues were derived from coal sales made to customers outside the United States.

In addition, we generate other revenues from equipment sales, rentals, terminal and processing fees, coal and environmental analysis fees, royalties and the sale of natural gas. We also record freight and handling fulfillment revenue within coal revenues for freight and handling services provided in delivering coal to certain customers, which are a component of the contractual selling price.

As of June 30, 2023, we have one reportable segment: Met. Our Met segment operations consist of high-quality met coal mines, including Deep Mine 41, Road Fork 52, Black Eagle, and Lynn Branch. The coal produced by our Met segment operations is predominantly met coal with some amounts of thermal coal being produced as a byproduct of mining. In addition to the one reportable segment, our All Other category includes general corporate overhead and corporate assets and liabilities, our former CAPP - Thermal operations consisting of one active mine and one preparation plant in West Virginia, and the elimination of certain intercompany activity, as well as expenses associated with certain idled/closed mines. Refer to Note 16 to our Condensed Consolidated Financial Statements for additional disclosures on reportable segments, geographic areas, and export coal revenue information.

As discussed in the “Market Overview” presented above, monetary tightening in the United States and Europe, a muted recovery in China, weak economic conditions across the globe, and the ongoing war between Russia and Ukraine have influenced metallurgical coal markets so far in 2023. As a result, our six months ended June 30, 2023 results of operations were impacted by the continued volatility in coal indices.

Other Business Developments

In January 2023, our subsidiary Maxxim Rebuild Co., LLC (“Maxxim”) completed a series of transactions to acquire a number of coal trucks and related equipment and facilities to secure trucking services for our operations.

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Factors Affecting Our Results of Operations

Sales Agreements. We manage our commodity price risk for coal sales through the use of coal supply agreements. As of July 27, 2023, we had sales commitments for 2023 as follows:


	Tons	% Priced		Average Realized Price per Ton
Met - Domestic				$193.11
Met - Export				$186.00
Met Total	15.5 million	71	%	$189.15
Thermal	1.2 million	100	%	$99.67
Met Segment	16.7 million	75	%	$178.42
All Other	0.5 million	100	%	$90.47

Realized Pricing. Our realized price per ton of coal is influenced by many factors that vary by region, including (i) coal quality, which includes energy (heat content), sulfur, ash, volatile matter and moisture content; (ii) differences in market conventions concerning transportation costs and volume measurement; and (iii) regional supply and demand.

Costs. Our results of operations are dependent upon our ability to maximize productivity and control costs. Our primary expenses are for operating supply costs, repair and maintenance expenditures, costs of purchased coal, royalties, wages and benefits, freight and handling costs and taxes incurred in selling our coal. The principal goods and services we use in our operations include maintenance and repair parts and services, electricity, fuel, roof control and support items, explosives, tires, conveyance structures, ventilation supplies and lubricants. Our management strives to aggressively control costs and improve operating performance to mitigate external cost pressures. We experience volatility in operating costs related to fuel, explosives, steel, tires, contract services and healthcare, among others, and take measures to mitigate the increases in these costs at all operations. We have a centralized sourcing group for major supplier contract negotiation and administration, for the negotiation and purchase of major capital goods, and to support the business units. We promote competition between suppliers and seek to develop relationships with suppliers that focus on lowering our costs. We seek suppliers who identify and concentrate on implementing continuous improvement opportunities within their area of expertise. To the extent upward pressure on costs exceeds our ability to realize sales increases, or if we experience unanticipated operating or transportation difficulties, our operating margins would be negatively impacted. We may also experience difficult geologic conditions, delays in obtaining permits, labor shortages, unforeseen equipment problems, and unexpected shortages of critical materials such as tires, fuel and explosives that may result in adverse cost increases and limit our ability to produce at forecasted levels.

Results of Operations

Our results of operations for the three and six months ended June 30, 2023 and 2022 are discussed in these “Results of Operations” presented below. Certain immaterial amounts for the three and six months ended June 30, 2022 have been recast to reclassify discontinued operations and present the related amounts within continuing operations as part of the All Other category.

Three Months Ended June 30, 2023 Compared to the Three Months Ended June 30, 2022

Revenues

The following table summarizes information about our revenues during the three months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Increase (Decrease)
(In thousands, except for per ton data)	2023		2022		$ or Tons		%
Coal revenues	$	853,807	$	1,334,258	$	(480,451)	(36.0)	%
Other revenues	4,564		2,154		2,410		111.9	%
Total revenues	$	858,371	$	1,336,412	$	(478,041)	(35.8)	%

Tons sold	4,348		4,304		44		1.0	%

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Coal revenues. Coal revenues decreased $480.5 million, or 36.0%, for the three months ended June 30, 2023 compared to the prior year period. The decrease was primarily due to a 38.3% reduction in coal sales realizations within our Met segment as pricing moderated from the higher levels experienced during the prior year. The elevated coal sales pricing environment in the prior year period was driven by increased coal demand, resulting from improved economic activity, coupled with limited supply response. Refer to the “Non-GAAP Coal revenues” section below for further detail on coal revenues for the three months ended June 30, 2023 compared to the prior year period.

Cost and Expenses

The following table summarizes information about our costs and expenses during the three months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Increase (Decrease)
(In thousands)	2023		2022		$		%
Cost of coal sales (exclusive of items shown separately below)	$	583,514	$	627,429	$	(43,915)	(7.0)	%
Depreciation, depletion and amortization	32,226		27,730		4,496		16.2	%
Accretion on asset retirement obligations	6,376		5,947		429		7.2	%
Amortization of acquired intangibles, net	2,192		5,747		(3,555)		(61.9)	%
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization shown separately above)	17,506		18,158		(652)		(3.6)	%
Total other operating loss (income):
Mark-to-market adjustment for acquisition-related obligations	—		4,208		(4,208)		(100.0)	%
Other income	(1,546)		(1,516)		(30)		(2.0)	%
Total costs and expenses	$	640,268	$	687,703	$	(47,435)	(6.9)	%

Cost of coal sales. Cost of coal sales decreased $43.9 million, or 7.0%, for the three months ended June 30, 2023 compared to the prior year period. The decrease was primarily driven by lower per ton freight and handling, royalty, and severance tax costs as a result of the lower coal pricing environment which more than offset the impact of higher labor and supply costs due to inflationary pressure.

Depreciation, depletion and amortization. Depreciation, depletion and amortization increased $4.5 million, or 16.2%, for the three months ended June 30, 2023 compared to the prior year period. The increase was primarily due to capital expenditures.

Amortization of acquired intangibles, net. Amortization of acquired intangibles, net decreased $3.6 million, or 61.9%, for the three months ended June 30, 2023 compared to the prior year period. The decrease was primarily driven by accelerated prior period amortization of certain acquired mine permits as a result of an update to the estimated life of the associated mines.

Mark-to-market adjustment for acquisition-related obligations. The mark-to-market adjustment for acquisition-related obligations was $4.2 million for the three months ended June 30, 2022. As the royalty period ended on December 31, 2022, there was no mark-to-market adjustment recorded during the three months ended June 30, 2023. Refer to Notes 9 and 11 for additional information on the Contingent Revenue Obligation.

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Other (Expense) Income

The following table summarizes information about our other (expense) income during the three months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Increase (Decrease)
(In thousands)	2023		2022		$		%
Other (expense) income:
Interest expense	$	(1,856)	$	(5,218)	$	3,362	64.4	%
Interest income	2,754		170		2,584		1,520.0	%
Equity loss in affiliates	(3,174)		(2,136)		(1,038)		(48.6)	%
Miscellaneous (expense) income, net	(874)		1,264		(2,138)		(169.1)	%
Total other expense, net	$	(3,150)	$	(5,920)	$	2,770	46.8	%

Interest expense. Interest expense decreased $3.4 million, or 64.4%, for the three months ended June 30, 2023 compared to the prior year period, primarily due to a reduction in outstanding debt.

Interest income. Interest income increased $2.6 million, or 1,520.0%, for the three months ended June 30, 2023 compared to the prior year period. The increase was primarily due to rising cash balances and an increasing interest rate environment.

Miscellaneous (expense) income, net. Miscellaneous expense, net resulted in a decrease to income of $2.1 million, or 169.1%, for the three months ended June 30, 2023 compared to the prior year period. The decrease was primarily related to the net periodic benefit cost for pension obligations. Refer to Note 13 for additional information.

Income Tax Expense

The following table summarizes information about our income tax expense during the three months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Increase (Decrease)
(In thousands)	2023		2022		$		%
Income tax expense	$	33,598	$	68,632	$	(35,034)	(51.0)	%

Income taxes. Income tax expense of $33.6 million was recorded for the three months ended June 30, 2023 on income before income taxes of $215.0 million. The effective tax rate differs from the federal statutory rate of 21% primarily due to the permanent impact of percentage depletion and foreign-derived intangible income deductions.

Income tax expense of $68.6 million was recorded for the three months ended June 30, 2022 on income before income taxes of $642.8 million. The effective tax rate differs from the federal statutory rate of 21% primarily due to the decrease in the valuation allowance and the permanent impact of percentage depletion and foreign-derived intangible income deductions. Refer to Note 12 for additional information.

Non-GAAP Financial Measures

The discussion below contains “non-GAAP financial measures.” These are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP” or “GAAP”). Specifically, we make use of the non-GAAP financial measures “Adjusted EBITDA,” “non-GAAP coal revenues,” “non-GAAP cost of coal sales,” and “non-GAAP coal margin.” We use Adjusted EBITDA to measure the operating performance of our segments and allocate resources to the segments. Adjusted EBITDA does not purport to be an alternative to net income (loss) as a measure of operating performance or any other measure of operating results or liquidity presented in accordance with GAAP. We use non-GAAP coal revenues to present coal revenues generated, excluding freight and handling fulfillment revenues. Non-GAAP coal sales realization per ton for our operations is calculated as non-GAAP coal revenues divided by tons sold. We use non-GAAP cost of coal sales to adjust cost of coal sales to remove freight and handling costs, depreciation, depletion and amortization - production (excluding the depreciation, depletion and amortization related to selling, general and administrative functions), accretion on asset retirement obligations, amortization of acquired intangibles, net, and idled and closed mine costs. Non-GAAP cost of coal sales per ton for our operations is calculated as non-GAAP cost of coal sales divided by tons sold. Non-GAAP coal margin per ton for our coal operations is calculated as non-GAAP coal sales realization per ton for our coal operations less non-

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GAAP cost of coal sales per ton for our coal operations. The presentation of these measures should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP.

Management uses non-GAAP financial measures to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. The definition of these non-GAAP measures may be changed periodically by management to adjust for significant items important to an understanding of operating trends and to adjust for items that may not reflect the trend of future results by excluding transactions that are not indicative of our core operating performance. Furthermore, analogous measures are used by industry analysts to evaluate the Company’s operating performance. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate, and capital investments.

Included below are reconciliations of non-GAAP financial measures to GAAP financial measures.

The following tables summarize certain financial information relating to our coal operations for the three months ended June 30, 2023 and 2022:


	Three Months Ended June 30, 2023
(In thousands, except for per ton data)	Met		All Other		Consolidated
Coal revenues	$	833,974	$	19,833	$	853,807
Less: Freight and handling fulfillment revenues	(118,222)		—		(118,222)
Non-GAAP Coal revenues	$	715,752	$	19,833	$	735,585
Tons sold	4,149		199		4,348
Non-GAAP Coal sales realization per ton	$	172.51	$	99.66	$	169.18

Cost of coal sales (exclusive of items shown separately below)	$	563,495	$	20,019	$	583,514
Depreciation, depletion and amortization - production (1)	31,649		287		31,936
Accretion on asset retirement obligations	3,721		2,655		6,376
Amortization of acquired intangibles, net	2,192		—		2,192
Total Cost of coal sales	$	601,057	$	22,961	$	624,018
Less: Freight and handling costs	(118,222)		—		(118,222)
Less: Depreciation, depletion and amortization - production (1)	(31,649)		(287)		(31,936)
Less: Accretion on asset retirement obligations	(3,721)		(2,655)		(6,376)
Less: Amortization of acquired intangibles, net	(2,192)		—		(2,192)
Less: Idled and closed mine costs	(4,022)		(2,389)		(6,411)
Non-GAAP Cost of coal sales	$	441,251	$	17,630	$	458,881
Tons sold	4,149		199		4,348
Non-GAAP Cost of coal sales per ton	$	106.35	$	88.59	$	105.54

(1) Depreciation, depletion and amortization - production excludes the depreciation, depletion and amortization related to selling, general and administrative functions.

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	Three Months Ended June 30, 2023
(In thousands, except for per ton data)	Met		All Other		Consolidated
Coal revenues	$	833,974	$	19,833	$	853,807
Less: Total Cost of coal sales (per table above)	(601,057)		(22,961)		(624,018)
GAAP Coal margin	$	232,917	$	(3,128)	$	229,789
Tons sold	4,149		199		4,348
GAAP Coal margin per ton	$	56.14	$	(15.72)	$	52.85

GAAP Coal margin	$	232,917	$	(3,128)	$	229,789
Add: Depreciation, depletion and amortization - production (1)	31,649		287		31,936
Add: Accretion on asset retirement obligations	3,721		2,655		6,376
Add: Amortization of acquired intangibles, net	2,192		—		2,192
Add: Idled and closed mine costs	4,022		2,389		6,411
Non-GAAP Coal margin	$	274,501	$	2,203	$	276,704
Tons sold	4,149		199		4,348
Non-GAAP Coal margin per ton	$	66.16	$	11.07	$	63.64

(1) Depreciation, depletion and amortization - production excludes the depreciation, depletion and amortization related to selling, general and administrative functions.


	Three Months Ended June 30, 2022
(In thousands, except for per ton data)	Met		All Other		Consolidated
Coal revenues	$	1,318,661	$	15,597	$	1,334,258
Less: Freight and handling fulfillment revenues	(156,522)		—		(156,522)
Non-GAAP Coal revenues	$	1,162,139	$	15,597	$	1,177,736
Tons sold	4,050		254		4,304
Non-GAAP Coal sales realization per ton	$	286.95	$	61.41	$	273.64

Cost of coal sales (exclusive of items shown separately below)	$	610,224	$	17,205	$	627,429
Depreciation, depletion and amortization - production (1)	27,202		250		27,452
Accretion on asset retirement obligations	3,390		2,557		5,947
Amortization of acquired intangibles, net	4,795		952		5,747
Total Cost of coal sales	$	645,611	$	20,964	$	666,575
Less: Freight and handling costs	(156,522)		—		(156,522)
Less: Depreciation, depletion and amortization - production (1)	(27,202)		(250)		(27,452)
Less: Accretion on asset retirement obligations	(3,390)		(2,557)		(5,947)
Less: Amortization of acquired intangibles, net	(4,795)		(952)		(5,747)
Less: Idled and closed mine costs	(2,708)		(4,531)		(7,239)
Non-GAAP Cost of coal sales	$	450,994	$	12,674	$	463,668
Tons sold	4,050		254		4,304
Non-GAAP Cost of coal sales per ton	$	111.36	$	49.90	$	107.73

(1) Depreciation, depletion and amortization - production excludes the depreciation, depletion and amortization related to selling, general and administrative functions.

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	Three Months Ended June 30, 2022
(In thousands, except for per ton data)	Met		All Other		Consolidated
Coal revenues	$	1,318,661	$	15,597	$	1,334,258
Less: Total Cost of coal sales (per table above)	(645,611)		(20,964)		(666,575)
GAAP Coal margin	$	673,050	$	(5,367)	$	667,683
Tons sold	4,050		254		4,304
GAAP Coal margin per ton	$	166.19	$	(21.13)	$	155.13

GAAP Coal margin	$	673,050	$	(5,367)	$	667,683
Add: Depreciation, depletion and amortization - production (1)	27,202		250		27,452
Add: Accretion on asset retirement obligations	3,390		2,557		5,947
Add: Amortization of acquired intangibles, net	4,795		952		5,747
Add: Idled and closed mine costs	2,708		4,531		7,239
Non-GAAP Coal margin	$	711,145	$	2,923	$	714,068
Tons sold	4,050		254		4,304
Non-GAAP Coal margin per ton	$	175.59	$	11.51	$	165.91

(1) Depreciation, depletion and amortization - production excludes the depreciation, depletion and amortization related to selling, general and administrative functions.


	Three Months Ended June 30,				Increase (Decrease)
(In thousands, except for per ton data)	2023		2022		$ or Tons		%
Met segment operations:
Tons sold	4,149		4,050		99		2.4	%
Non-GAAP Coal revenues	$	715,752	$	1,162,139	$	(446,387)	(38.4)	%
Non-GAAP Coal sales realization per ton	$	172.51	$	286.95	$	(114.44)	(39.9)	%

All Other category:
Tons sold	199		254		(55)		(21.7)	%
Non-GAAP Coal revenues	$	19,833	$	15,597	$	4,236	27.2	%
Non-GAAP Coal sales realization per ton	$	99.66	$	61.41	$	38.25	62.3	%

Non-GAAP Coal revenues. Met segment operations non-GAAP coal revenues decreased $446.4 million, or 38.4%, for the three months ended June 30, 2023 compared to the prior year period. The decrease was primarily due to a $114.44 per ton, or 39.9%, reduction in average non-GAAP coal sales realization as prices moderated from the higher levels experienced during the second quarter of 2022. The elevated coal sales pricing environment in the prior year period was driven by increased coal demand, resulting from improved economic activity, coupled with limited supply response.

All Other category non-GAAP coal revenues increased $4.2 million, or 27.2%, for the three months ended June 30, 2023 compared to the prior year period as an improved thermal coal pricing environment more than offset a decline in coal sales volumes as our Mammoth mining complex's remaining mine works toward cessation of mining.

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	Three Months Ended June 30,				Increase (Decrease)
(In thousands, except for per ton data)	2023		2022		$		%
Met segment operations:
Non-GAAP Cost of coal sales	$	441,251	$	450,994	$	(9,743)	(2.2)	%
Non-GAAP Cost of coal sales per ton	$	106.35	$	111.36	$	(5.01)	(4.5)	%
Non-GAAP Coal margin per ton	$	66.16	$	175.59	$	(109.43)	(62.3)	%

All Other category:
Non-GAAP Cost of coal sales	$	17,630	$	12,674	$	4,956	39.1	%
Non-GAAP Cost of coal sales per ton	$	88.59	$	49.90	$	38.69	77.5	%
Non-GAAP Coal margin per ton	$	11.07	$	11.51	$	(0.44)	(3.8)	%

Non-GAAP Cost of coal sales. Met segment operations non-GAAP cost of coal sales decreased $9.7 million, or 2.2%, for the three months ended June 30, 2023 compared to the prior year period. The decrease was primarily driven by reductions in royalties and taxes as a result of a lower pricing environment, partially offset by increased labor and supplies costs due to inflationary pressures.

All Other category non-GAAP cost of coal sales increased $5.0 million, or 39.1%, for the three months ended June 30, 2023 compared to the prior year period. The increase was primarily driven by higher labor and supplies costs due to inflationary pressures and increased royalties and taxes due to the increased thermal coal pricing environment, partially offset by lower sales volumes.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that is presented as a supplemental measure and is not intended to replace financial performance or liquidity measures determined in accordance with GAAP. Moreover, this measure is not calculated identically by all companies and therefore may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA is presented because management believes it is a useful indicator of the financial performance of our coal operations. The following tables present a reconciliation of net income (loss) to Adjusted EBITDA for the three months ended June 30, 2023 and 2022:


	Three Months Ended June 30, 2023
(In thousands)	Met		All Other		Consolidated
Net income (loss)	$	231,394	$	(50,039)	$	181,355
Interest expense	198		1,658		1,856
Interest income	(86)		(2,668)		(2,754)
Income tax expense	—		33,598		33,598
Depreciation, depletion and amortization	31,649		577		32,226
Non-cash stock compensation expense	27		3,618		3,645
Accretion on asset retirement obligations	3,721		2,655		6,376
Amortization of acquired intangibles, net	2,192		—		2,192
Adjusted EBITDA	$	269,095	$	(10,601)	$	258,494

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	Three Months Ended June 30, 2022
(In thousands)	Met		All Other		Consolidated
Net income (loss)	$	670,801	$	(96,644)	$	574,157
Interest expense	43		5,175		5,218
Interest income	—		(170)		(170)
Income tax expense	—		68,632		68,632
Depreciation, depletion and amortization	27,203		527		27,730
Non-cash stock compensation expense	—		1,401		1,401
Mark-to-market adjustment - acquisition-related obligations	—		4,208		4,208
Accretion on asset retirement obligations	3,390		2,557		5,947
Amortization of acquired intangibles, net	4,795		952		5,747
Adjusted EBITDA	$	706,232	$	(13,362)	$	692,870

The following table summarizes Adjusted EBITDA for our Met segment operations and All Other category:


	Three Months Ended June 30,				Increase (Decrease)
(In thousands)	2023		2022		$		%
Adjusted EBITDA
Met segment operations	$	269,095	$	706,232	$	(437,137)	(61.9)	%
All Other category	(10,601)		(13,362)		2,761		20.7	%
Total	$	258,494	$	692,870	$	(434,376)	(62.7)	%

Met segment operations. Adjusted EBITDA decreased $437.1 million, or 61.9%, for the three months ended June 30, 2023 compared to the prior year period. The decrease in Adjusted EBITDA was primarily driven by decreased coal margin and lower non-GAAP coal sales realization per ton in the current period.

All Other category. Adjusted EBITDA increased $2.8 million, or 20.7%, for the three months ended June 30, 2023 compared to the prior year period. The increase in Adjusted EBITDA was primarily driven by higher non-GAAP coal sales realization per ton in the current period.

Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

Revenues

The following table summarizes information about our revenues during the six months ended June 30, 2023 and 2022:


	Six Months Ended June 30,				Increase (Decrease)
(In thousands, except for per ton data)	2023		2022		$ or Tons		%
Coal revenues	$	1,760,505	$	2,403,996	$	(643,491)	(26.8)	%
Other revenues	9,101		4,380		4,721		107.8	%
Total revenues	$	1,769,606	$	2,408,376	$	(638,770)	(26.5)	%

Tons sold	8,263		8,352		(89)		(1.1)	%

Coal revenues. Coal revenues decreased $643.5 million, or 26.8%, for the six months ended June 30, 2023 compared to the prior year period. The decrease was primarily due to a 28.0% reduction in coal sales realizations within our Met segment as pricing moderated from the higher levels experienced during the prior year. The elevated coal sales pricing environment in the prior year period was driven by increased coal demand, resulting from improved economic activity, coupled with limited supply response. Refer to the “Non-GAAP Coal revenues” section below for further detail on coal revenues for the six months ended June 30, 2023 compared to the prior year period.

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Cost and Expenses

The following table summarizes information about our costs and expenses during the six months ended June 30, 2023 and 2022:


	Six Months Ended June 30,				Increase (Decrease)
(In thousands)	2023		2022		$		%
Cost of coal sales (exclusive of items shown separately below)	$	1,122,651	$	1,182,771	$	(60,120)	(5.1)	%
Depreciation, depletion and amortization	61,649		55,765		5,884		10.6	%
Accretion on asset retirement obligations	12,753		11,901		852		7.2	%
Amortization of acquired intangibles, net	4,389		11,495		(7,106)		(61.8)	%
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization shown separately above)	38,198		33,244		4,954		14.9	%
Total other operating loss (income):
Mark-to-market adjustment for acquisition-related obligations	—		13,569		(13,569)		(100.0)	%
Other income	(2,638)		(2,144)		(494)		(23.0)	%
Total costs and expenses	$	1,237,002	$	1,306,601	$	(69,599)	(5.3)	%

Cost of coal sales. Cost of coal sales decreased $60.1 million, or 5.1%, for the six months ended June 30, 2023 compared to the prior year period. The decrease was primarily driven by lower per ton freight and handling, royalty, and severance tax costs as a result of the lower coal pricing environment partially offset by the impact of higher labor and supply costs due to inflationary pressure.

Depreciation, depletion and amortization. Depreciation, depletion and amortization increased $5.9 million, or 10.6%, for the six months ended June 30, 2023 compared to the prior year period. The increase was primarily due to capital expenditures.

Amortization of acquired intangibles, net. Amortization of acquired intangibles, net decreased $7.1 million, or 61.8%, for the six months ended June 30, 2023 compared to the prior year period. The decrease was primarily driven by accelerated prior period amortization of certain acquired mine permits as a result of an update to the estimated life of the associated mines.

Selling, general and administrative. Selling, general and administrative expenses increased $5.0 million, or 14.9%, for the six months ended June 30, 2023 compared to the prior year period. This increase was primarily related to increases of $3.6 million in stock compensation expense, $1.5 million in wages and benefits expense, and $0.2 million in professional fees, partially offset by a decrease of $0.8 million in incentive pay.

Mark-to-market adjustment for acquisition-related obligations. The mark-to-market adjustment for acquisition-related obligations was $13.6 million for the six months ended June 30, 2022. As the royalty period ended on December 31, 2022, there was no mark-to-market adjustment recorded during the six months ended June 30, 2023. Refer to Notes 9 and 11 for additional information on the Contingent Revenue Obligation.

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Other (Expense) Income

The following table summarizes information about our other (expense) income during the six months ended June 30, 2023 and 2022:


	Six Months Ended June 30,				Increase (Decrease)
(In thousands)	2023		2022		$		%
Other (expense) income:
Interest expense	$	(3,576)	$	(18,301)	$	14,725	80.5	%
Interest income	4,272		354		3,918		1,106.8	%
Equity loss in affiliates	(4,922)		(3,497)		(1,425)		(40.7)	%
Miscellaneous (expense) income, net	(243)		2,940		(3,183)		(108.3)	%
Total other expense, net	$	(4,469)	$	(18,504)	$	14,035	75.8	%

Interest expense. Interest expense decreased $14.7 million, or 80.5%, for the six months ended June 30, 2023 compared to the prior year period, primarily due to a reduction in outstanding debt.

Interest income. Interest income increased $3.9 million, or 1,106.8%, for the six months ended June 30, 2023 compared to the prior year period. The increase was primarily due to rising cash balances and an increasing interest rate environment.

Miscellaneous (expense) income, net. Miscellaneous expense, net resulted in a decrease to income of $3.2 million, or 108.3%, for the six months ended June 30, 2023 compared to the prior year period. The decrease was primarily related to the net periodic benefit cost for pension obligations. Refer to Note 13 for additional information.

Income Tax Expense

The following table summarizes information about our income tax expense during the six months ended June 30, 2023 and 2022:


	Six Months Ended June 30,				Increase (Decrease)
(In thousands)	2023		2022		$		%
Income tax expense	$	76,009	$	108,223	$	(32,214)	(29.8)	%

Income taxes. Income tax expense of $76.0 million was recorded for the six months ended June 30, 2023 on income before income taxes of $528.1 million. The effective tax rate differs from the federal statutory rate of 21% primarily due to the permanent impact of percentage depletion and foreign-derived intangible income deductions.

Income tax expense of $108.2 million was recorded for the six months ended June 30, 2022 on income before income taxes of $1,083.3 million. The effective tax rate differs from the federal statutory rate of 21% primarily due to the decrease in the valuation allowance and the permanent impact of percentage depletion and foreign-derived intangible income deductions. Refer to Note 12 for additional information.

Non-GAAP Financial Measures

Included below are reconciliations of non-GAAP financial measures to GAAP financial measures.

The following tables summarize certain financial information relating to our coal operations for the six months ended June 30, 2023 and 2022:

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	Six Months Ended June 30, 2023
(In thousands, except for per ton data)	Met		All Other		Consolidated
Coal revenues	$	1,720,981	$	39,524	$	1,760,505
Less: Freight and handling fulfillment revenues	(224,474)		(225)		(224,699)
Non-GAAP Coal revenues	$	1,496,507	$	39,299	$	1,535,806
Tons sold	7,886		377		8,263
Non-GAAP Coal sales realization per ton	$	189.77	$	104.24	$	185.87

Cost of coal sales (exclusive of items shown separately below)	$	1,086,493	$	36,158	$	1,122,651
Depreciation, depletion and amortization - production (1)	60,528		545		61,073
Accretion on asset retirement obligations	7,443		5,310		12,753
Amortization of acquired intangibles, net	4,389		—		4,389
Total Cost of coal sales	$	1,158,853	$	42,013	$	1,200,866
Less: Freight and handling costs	(224,474)		(225)		(224,699)
Less: Depreciation, depletion and amortization - production (1)	(60,528)		(545)		(61,073)
Less: Accretion on asset retirement obligations	(7,443)		(5,310)		(12,753)
Less: Amortization of acquired intangibles, net	(4,389)		—		(4,389)
Less: Idled and closed mine costs	(7,600)		(5,009)		(12,609)
Non-GAAP Cost of coal sales	$	854,419	$	30,924	$	885,343
Tons sold	7,886		377		8,263
Non-GAAP Cost of coal sales per ton	$	108.35	$	82.03	$	107.15

(1) Depreciation, depletion and amortization - production excludes the depreciation, depletion and amortization related to selling, general and administrative functions.


	Six Months Ended June 30, 2023
(In thousands, except for per ton data)	Met		All Other		Consolidated
Coal revenues	$	1,720,981	$	39,524	$	1,760,505
Less: Total Cost of coal sales (per table above)	(1,158,853)		(42,013)		(1,200,866)
GAAP Coal margin	$	562,128	$	(2,489)	$	559,639
Tons sold	7,886		377		8,263
GAAP Coal margin per ton	$	71.28	$	(6.60)	$	67.73

GAAP Coal margin	$	562,128	$	(2,489)	$	559,639
Add: Depreciation, depletion and amortization - production (1)	60,528		545		61,073
Add: Accretion on asset retirement obligations	7,443		5,310		12,753
Add: Amortization of acquired intangibles, net	4,389		—		4,389
Add: Idled and closed mine costs	7,600		5,009		12,609
Non-GAAP Coal margin	$	642,088	$	8,375	$	650,463
Tons sold	7,886		377		8,263
Non-GAAP Coal margin per ton	$	81.42	$	22.21	$	78.72

(1) Depreciation, depletion and amortization - production excludes the depreciation, depletion and amortization related to selling, general and administrative functions.

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	Six Months Ended June 30, 2022
(In thousands, except for per ton data)	Met		All Other		Consolidated
Coal revenues	$	2,373,001	$	30,995	$	2,403,996
Less: Freight and handling fulfillment revenues	(300,547)		(18)		(300,565)
Non-GAAP Coal revenues	$	2,072,454	$	30,977	$	2,103,431
Tons sold	7,830		522		8,352
Non-GAAP Coal sales realization per ton	$	264.68	$	59.34	$	251.85

Cost of coal sales (exclusive of items shown separately below)	$	1,149,506	$	33,265	$	1,182,771
Depreciation, depletion and amortization - production (1)	54,262		1,047		55,309
Accretion on asset retirement obligations	6,788		5,113		11,901
Amortization of acquired intangibles, net	9,591		1,904		11,495
Total Cost of coal sales	$	1,220,147	$	41,329	$	1,261,476
Less: Freight and handling costs	(300,547)		(18)		(300,565)
Less: Depreciation, depletion and amortization - production (1)	(54,262)		(1,047)		(55,309)
Less: Accretion on asset retirement obligations	(6,788)		(5,113)		(11,901)
Less: Amortization of acquired intangibles, net	(9,591)		(1,904)		(11,495)
Less: Idled and closed mine costs	(6,312)		(7,202)		(13,514)
Non-GAAP Cost of coal sales	$	842,647	$	26,045	$	868,692
Tons sold	7,830		522		8,352
Non-GAAP Cost of coal sales per ton	$	107.62	$	49.89	$	104.01


	Six Months Ended June 30, 2022
(In thousands, except for per ton data)	Met		All Other		Consolidated
Coal revenues	$	2,373,001	$	30,995	$	2,403,996
Less: Total Cost of coal sales (per table above)	(1,220,147)		(41,329)		(1,261,476)
GAAP Coal margin	$	1,152,854	$	(10,334)	$	1,142,520
Tons sold	7,830		522		8,352
GAAP Coal margin per ton	$	147.24	$	(19.80)	$	136.80

GAAP Coal margin	$	1,152,854	$	(10,334)	$	1,142,520
Add: Depreciation, depletion and amortization - production (1)	54,262		1,047		55,309
Add: Accretion on asset retirement obligations	6,788		5,113		11,901
Add: Amortization of acquired intangibles, net	9,591		1,904		11,495
Add: Idled and closed mine costs	6,312		7,202		13,514
Non-GAAP Coal margin	$	1,229,807	$	4,932	$	1,234,739
Tons sold	7,830		522		8,352
Non-GAAP Coal margin per ton	$	157.06	$	9.45	$	147.84

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	Six Months Ended June 30,				Increase (Decrease)
(In thousands, except for per ton data)	2023		2022		$		%
Met segment operations:
Tons sold	7,886		7,830		56		0.7	%
Non-GAAP Coal revenues	$	1,496,507	$	2,072,454	$	(575,947)	(27.8)	%
Non-GAAP Coal sales realization per ton	$	189.77	$	264.68	$	(74.91)	(28.3)	%

All Other category:
Tons sold	377		522		(145)		(27.8)	%
Non-GAAP Coal revenues	$	39,299	$	30,977	$	8,322	26.9	%
Non-GAAP Coal sales realization per ton	$	104.24	$	59.34	$	44.90	75.7	%

Non-GAAP Coal revenues. Met segment operations non-GAAP coal revenues decreased $575.9 million, or 27.8%, for the six months ended June 30, 2023 compared to the prior year period. The decrease was primarily due to a $74.91 per ton, or 28.3%, reduction in average non-GAAP coal sales realization as prices moderated from the higher levels experienced during the prior year comparable period. The elevated coal sales pricing environment in the prior year period was driven by increased coal demand resulting from improved economic activity, coupled with limited supply response.

All Other category non-GAAP coal revenues increased $8.3 million, or 26.9%, for the six months ended June 30, 2023 compared to the prior year period as an improved thermal coal pricing environment more than offset a decline in coal sales volumes as our Mammoth mining complex's remaining mine works toward cessation of mining.


	Six Months Ended June 30,				Increase (Decrease)
(In thousands, except for per ton data)	2023		2022		$		%
Met segment operations:
Non-GAAP Cost of coal sales	$	854,419	$	842,647	$	11,772	1.4	%
Non-GAAP Cost of coal sales per ton	$	108.35	$	107.62	$	0.73	0.7	%
Non-GAAP Coal margin per ton	$	81.42	$	157.06	$	(75.64)	(48.2)	%

All Other category:
Non-GAAP Cost of coal sales	$	30,924	$	26,045	$	4,879	18.7	%
Non-GAAP Cost of coal sales per ton	$	82.03	$	49.89	$	32.14	64.4	%
Non-GAAP Coal margin per ton	$	22.21	$	9.45	$	12.76	135.0	%

Non-GAAP Cost of coal sales. Met segment operations non-GAAP cost of coal sales increased $11.8 million, or 1.4%, for the six months ended June 30, 2023 compared to the prior year period. The increase was primarily driven by increased labor and supplies costs due to inflationary pressures, partially offset by reductions in royalties and taxes as a result of a lower coal pricing environment.

All Other category non-GAAP cost of coal sales increased $4.9 million, or 18.7%, for the six months ended June 30, 2023 compared to the prior year period. The increase was primarily driven by higher labor and supplies costs due to inflationary pressures and increased royalties and taxes due to the increased thermal coal pricing environment, partially offset by lower sales volumes.

Adjusted EBITDA

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	Six Months Ended June 30, 2023
	Met		All Other		Consolidated
Net income (loss)	$	558,608	$	(106,482)	$	452,126
Interest expense	363		3,213		3,576
Interest income	(274)		(3,998)		(4,272)
Income tax expense	—		76,009		76,009
Depreciation, depletion and amortization	60,528		1,121		61,649
Non-cash stock compensation expense	46		6,633		6,679
Accretion on asset retirement obligations	7,443		5,310		12,753
Amortization of acquired intangibles, net	4,389		—		4,389
Adjusted EBITDA	$	631,103	$	(18,194)	$	612,909


	Six Months Ended June 30, 2022
	Met		All Other		Consolidated
Net income (loss)	$	1,148,968	$	(173,920)	$	975,048
Interest expense	92		18,209		18,301
Interest income	(172)		(182)		(354)
Income tax expense	—		108,223		108,223
Depreciation, depletion and amortization	54,263		1,502		55,765
Non-cash stock compensation expense	3		2,580		2,583
Mark-to-market adjustment - acquisition-related obligations	—		13,569		13,569
Accretion on asset retirement obligations	6,788		5,113		11,901
Amortization of acquired intangibles, net	9,591		1,904		11,495
Adjusted EBITDA	$	1,219,533	$	(23,002)	$	1,196,531

The following table summarizes Adjusted EBITDA for our Met segment operations and All Other category:


	Six Months Ended June 30,				Increase (Decrease)
(In thousands)	2023		2022		$		%
Adjusted EBITDA
Met segment operations	$	631,103	$	1,219,533	$	(588,430)	(48.3)	%
All Other category	(18,194)		(23,002)		4,808		20.9	%
Total	$	612,909	$	1,196,531	$	(583,622)	(48.8)	%

Met segment operations. Adjusted EBITDA decreased $588.4 million, or 48.3%, for the six months ended June 30, 2023 compared to the prior year period. The decrease in Adjusted EBITDA was primarily driven by decreased coal margin and lower non-GAAP coal sales realization per ton in the current period.

All Other category. Adjusted EBITDA increased $4.8 million, or 20.9%, for the six months ended June 30, 2023 compared to the prior year period. The increase in Adjusted EBITDA was primarily driven by increased coal margin and higher non-GAAP coal sales realization per ton in the current period.

Liquidity and Capital Resources

Overview

Our primary liquidity and capital resource requirements stem from the cost of our coal production and purchases, our capital expenditures, our debt service, our reclamation obligations, taxes, our regulatory costs and settlements and associated costs. Our primary sources of liquidity are derived from sales of coal, our debt financing, and miscellaneous revenues.

We believe that cash on hand and cash generated from our operations will be sufficient to meet our working capital requirements, anticipated capital expenditures, income taxes, debt service requirements, acquisition-related obligations, and

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reclamation obligations for the next 12 months and the reasonably foreseeable future. We may also use cash in accordance with our share repurchase program and dividend program. We rely on a number of assumptions in budgeting for our future activities. These include the costs for mine development to sustain capacity of our operating mines, our cash flows from operations, effects of regulation and taxes by governmental agencies, mining technology improvements and reclamation costs. These assumptions are inherently subject to significant business, political, economic, regulatory, environmental and competitive uncertainties, pending and existing climate-related initiatives, contingencies and risks, all of which are difficult to predict and many of which are beyond our control. For example, if the new authorization process for all self-insured coal mine operators is adopted, it would substantially increase the collateral required to secure our self-insured federal black lung obligations. Refer to the DCMWC Reauthorization Process section below for more information. Increased scrutiny of ESG matters specific to the coal sector could negatively influence our ability to raise capital in the future and result in a reduced number of surety and insurance providers. We may need to raise additional funds if market conditions deteriorate, and we may not be able to do so in a timely fashion, on terms acceptable to us, or at all; one or more of our assumptions prove to be incorrect or if we choose to expand our acquisition, exploration, appraisal, or development efforts or any other activity more rapidly than we presently anticipate. Additionally, we may elect to raise additional funds before we need them if the conditions for raising capital are favorable. We may seek to sell equity or debt securities or obtain additional bank credit facilities. The sale of equity securities could result in dilution to our stockholders. The incurrence of additional indebtedness could result in increased fixed obligations and additional covenants that could restrict our operations.

Liquidity

The following table summarizes our total liquidity as of June 30, 2023:


(in thousands)	June 30, 2023
Cash and cash equivalents	$	312,400
Credit facility availability (1)	93,073
Total liquidity	$	405,473

(1) Comprised of our unused commitments available under the Second Amended and Restated Asset-Based Revolving Credit

Agreement (the “ABL Agreement”), subject to limitations described therein.

Cash Collateral

We are required to provide cash collateral to secure our obligations under certain workers’ compensation, black lung, reclamation-related obligations, financial payments and other performance obligations, and other operating agreements. Future regulatory changes relating to these obligations could result in increased obligations, additional costs, or additional collateral requirements which could require greater use of alternative sources of funding for this purpose, which would reduce our liquidity. Refer to the DCMWC Reauthorization Process section below for information related to the new authorization process for self-insured coal mine operators being implemented by the U.S. Department of Labor (Division of Coal Mine Workers’ Compensation). As of June 30, 2023, we had the following cash collateral on our Condensed Consolidated Balance Sheets:


(in thousands)	June 30, 2023
Long-term restricted cash	$	71,299
Long-term restricted investments	75,961
Short-term and long-term deposits (1)	7,871
Total cash collateral	$	155,131

(1) Includes $7,001 related to our dividend payable. Refer to Note 6 for additional information.

Off-Balance Sheet Arrangements

We are required to provide financial assurance in order to perform the post-mining reclamation required by our mining permits, pay workers’ compensation claims under workers’ compensation laws in various states, pay federal black lung benefits, and perform certain other obligations. In order to provide the required financial assurance, we generally use surety bonds for post-mining reclamation and workers’ compensation obligations. We also use bank letters of credit to collateralize certain obligations. As of June 30, 2023, we had the following outstanding surety bonds and letters of credit:

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(in thousands)	June 30, 2023
Surety bonds	$	164,997
Letters of credit (1)	$	61,927

(1) The letters of credit outstanding are under the ABL Agreement dated December 6, 2021.

Refer to Note 15, part (c) for further disclosures on off-balance sheet arrangements.

Debt Financing and Related Transactions

The ABL Agreement includes a senior secured asset-based revolving credit facility (the “ABL Facility”). Under the ABL Facility, we may borrow cash or obtain letters of credit, on a revolving basis, in an aggregate amount of up to $155.0 million, of which no more than $150.0 million may represent outstanding letters of credit ($125.0 million on a committed basis and another $25.0 million on an uncommitted cash collateralized basis) with the facility having a maturity date of December 6, 2024. Availability under the ABL Facility is calculated on a monthly basis and fluctuates based on qualifying amounts of coal inventory and trade accounts receivable (the “Borrowing Base”) and the facility's covenant limitations related to our Fixed Charge Coverage Ratio (refer to “Analysis of Material Debt Covenants” below). In accordance with terms of the ABL Facility, we may be required to cash collateralize the ABL Facility to the extent outstanding borrowings and letters of credit under the ABL Facility exceed the Borrowing Base after considering covenant limitations.

Refer to Note 8 for additional disclosures on long-term debt.

Acquisition-Related Obligations

During the first quarter of 2023, we paid the final calculated payment pursuant to terms of the Contingent Revenue Obligation. At June 30, 2023, we had $0.3 million of acquisition-related obligations outstanding. Refer to Note 9 for additional disclosures on acquisition-related obligations.

Capital Requirements

Our capital expenditures for the six months ended June 30, 2023 were $129.1 million. We expect to spend between $250.0 million and $280.0 million on capital expenditures during 2023.

Contractual Obligations

Our contractual obligations are discussed in the “Liquidity and Capital Resources—Contractual Obligations” section contained in our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes to our contractual obligations during the six months ended June 30, 2023.

Refer to Note 8, Note 9, and Note 15 for additional disclosures on long-term debt, acquisition-related obligations, and other commitments, respectively.

Business Updates

On July 18, 2023, Moody’s Investors Service upgraded our Corporate Family Rating to B1 from B2, upgraded our Probability of Default Rating to B1-PD from B2-PD, and affirmed our B1 rating on the ABL Facility. Our Speculative Grade Liquidity Rating remained unchanged at SGL-2. The rating outlook was revised to stable from positive. Should we receive any negative outlook ratings in the future, such negative outlook ratings would result in potential liquidity risks for us, including the risks of declines in our stock value, declines in our cash and cash equivalents, less availability and higher costs of additional credit, and requests for additional collateral by surety providers.

We continually strive to enhance our capital structure and financial flexibility and reduce cash outflows from operations. As opportunities arise, we will continue to consider the possibility of the refinancing, repayment or repurchase of any outstanding debt and amendment of our credit facility, and may consider the sale of other assets or businesses, and such other measures as we believe circumstances warrant. We may decide to pursue or not pursue these opportunities at any time. Access to additional funds from liquidity-generating transactions or other sources of external financing is subject to market conditions and certain limitations, including our credit rating and covenant restrictions in our credit facilities.

As a regular part of our business, we review opportunities for, and engage in discussions and negotiations concerning, the acquisition or disposition of coal mining and related infrastructure assets and interests in coal mining companies, and

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acquisitions or dispositions of, or combinations or other strategic transactions involving, companies with coal mining or other energy assets. When we believe that these opportunities are consistent with our strategic plans and our acquisition or disposition criteria, we will make bids or proposals and/or enter into letters of intent and other similar agreements. These bids or proposals, which may be binding or non-binding, are customarily subject to a variety of conditions and usually permit us to terminate the discussions and any related agreement if, among other things, we are not satisfied with the results of due diligence. Any acquisition opportunities we pursue could materially affect our liquidity and capital resources and may require us to incur indebtedness, seek equity capital or both. There can be no assurance that additional financing will be available on terms acceptable to us, or at all.

Income Taxes

As of June 30, 2023, the Company has recorded federal income taxes payable of $5.8 million. Refer to Note 12 for further disclosures related to income taxes.

Pension Plans

We expect to contribute $16.4 million to the pension plans in the remainder of 2023, which includes amounts above the estimated minimum required contributions for the 2023 plan year. Refer to Note 13 for further disclosures related to this obligation.

DCMWC Reauthorization Process

The reauthorization process provided us with the right to appeal the security determination in writing within 30 days of the date of the notification, which appeal period the DCMWC agreed to extend to May 22, 2020, and we exercised this right of appeal. We strongly disagree with the DCMWC’s substantially higher collateral determination and the methodology through which the calculation was derived. In February 2021, the U.S. Department of Labor (“DOL”) withdrew its Federal Register notice seeking comments on its bulletin describing its new method of calculating collateral requirements. The Department removed the bulletin from its website in May 2021. On February 10, 2022, a telephone conference was held with DCMWC and DOL decision makers wherein we presented facts and arguments in support of our appeal. No ruling has been made on the appeal, but during the call we indicated that we would be willing to allocate an additional $10.0 million in collateral. If our appeal is unsuccessful, we may be required to provide additional letters of credit in order to receive self-insurance reauthorization from the DCMWC or insure these black lung obligations through a third-party provider, which would likely also require us to provide additional collateral. In January 2023, the DOL proposed for public comment new regulations which, if adopted, would substantially increase the collateral required to secure self-insured federal black lung obligations. Under the proposed 120% minimum collateral requirement, we estimate we could be required to provide approximately $80.0 million to $100.0 million of collateral to secure certain of our black lung obligations. The DOL has indicated that it expects that some form of these new regulations could go into effect in the fourth quarter of 2023. A significant increase in these collateral obligations would have a materially adverse effect on our liquidity.

Share Repurchase Program

Refer to Note 6 and “Unregistered Sales of Equity Securities and Use of Proceeds” for information on the share repurchase program and the shares repurchased during the current period.

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Dividend Program

Refer to Note 6 and Note 17 for information related to our dividend program, the quarterly cash dividend declared during the current period, and the related subsequent event disclosures which includes the declaration of the quarterly cash dividend.

Cash Flows

Cash, cash equivalents, and restricted cash increased by $28.3 million and $13.9 million over the six months ended June 30, 2023 and 2022, respectively. The net change in cash, cash equivalents, and restricted cash was attributable to the following:


	Six Months Ended June 30,
	2023		2022
Cash flows (in thousands):
Net cash provided by operating activities	$	494,606	$	802,056
Net cash used in investing activities	(71,301)		(147,149)
Net cash used in financing activities	(395,000)		(641,021)
Net increase in cash and cash equivalents and restricted cash	$	28,305	$	13,886

Operating Activities. The decrease in net cash provided by operating activities for the six months ended June 30, 2023 compared to the prior year period was primarily attributable to lower coal sale realizations as discussed above in “Results of Operations,” partially offset by a corresponding reduction in outstanding accounts receivable balances during the current year period when compared to the prior year period.

Investing Activities. The decrease in net cash used in investing activities for the six months ended June 30, 2023 compared to the prior year period was primarily driven by a net increase in cash from investment security activity, partially offset by increases in capital expenditures and cash paid for business acquired.

Financing Activities. The decrease in net cash used in financing activities for the six months ended June 30, 2023 compared to the prior year period was primarily driven by decreases in principal repayments of long-term debt as a result of the payoff of the Term Loan Credit Facility in the prior year period, partially offset by increases in dividends paid and common stock repurchases and related expenses.

Analysis of Material Debt Covenants

We are in compliance with all covenants under the ABL Agreement as of June 30, 2023. A breach of the covenants in the ABL Agreement could result in a default under the terms of such agreement, and the respective lenders could then elect to declare all amounts borrowed due and payable.

Pursuant to the ABL Agreement, during any Liquidity Period (capitalized terms as defined in the ABL Agreement), our Fixed Charge Coverage Ratio cannot be less than 1.0 as of the last day of any Test Period, commencing with the Test Period ended immediately preceding the commencement of such Liquidity Period. The Fixed Charge Coverage Ratio is calculated as (a) Consolidated EBITDA of the Company and its Restricted Subsidiaries for such period, minus non-financed Capital Expenditures (including Capital Expenditures financed with the proceeds of any Loans) paid or payable currently in cash by the Company or any of its Subsidiaries for such period to (b) the Fixed Charges of the Company and its Restricted Subsidiaries during such period. As of June 30, 2023, we were not in a Liquidity Period.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other factors and assumptions, including the current economic environment, that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis and adjust such estimates and assumptions as facts and circumstances require. Foreign currency and energy markets, and fluctuations in demand for steel products, have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results may differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

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Our critical accounting policies are discussed in the “Critical Accounting Policies and Estimates” section contained in our Annual Report on Form 10-K for the year ended December 31, 2022. Our critical accounting policies remain unchanged at June 30, 2023. Refer to the Recent Accounting Guidance section in Note 1 for further information.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Commodity Price Risk

We manage our commodity price risk for coal sales through the use of coal supply agreements. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Results of Operations” for information on our sales commitments for 2023.

We have exposure to commodity price risk for supplies that are used directly or indirectly in the normal course of production such as diesel fuel, steel and other items such as explosives. We manage our risk for these items through strategic sourcing contracts in normal quantities with our suppliers.

The market price of diesel fuel fluctuates due to changes in production, seasonality, and other market factors generally outside of our control. Increased fuel costs may have a negative impact on our results of operations and financial condition. As of June 30, 2023, our forecasted diesel fuel usage and fixed price diesel fuel purchase commitments for 2023 are as follows:

Budgeted Usage in Gallons

% Priced

Average Realized Price per Gallon

Diesel fuel

23.9 million

85.7

$3.53

Interest Rate Risk

As of June 30, 2023, we maintain a senior secured asset-based revolving credit facility under which we may borrow up to $155.0 million (less amounts outstanding for letters of credit). Any cash borrowings under the facility would bear a floating rate of interest. No cash borrowings were outstanding under the facility as of June 30, 2023 or December 31, 2022. As of June 30, 2023 and December 31, 2022, we had $61.9 million letters of credit outstanding under the facility. Refer to Note 8 for additional information. Also refer to the “Financial Statements and Supplementary Data—Note 14” section contained in our Annual Report on Form 10-K for the year ended December 31, 2022 for discussion on the terms of our long-term debt.

As of June 30, 2023 and December 31, 2022, we had investments in trading securities of $76.0 million and $151.8 million respectively. While the fair value of these investments is exposed to risk with respect to changes in market rates of interest, we do not believe exposure to changes in interest rates is material to our consolidated financial statements. We manage risk by investing in shorter term highly rated debt obligations (primarily U.S. government securities). As of June 30, 2023 and December 31, 2022, the remaining maturities of our acquired debt securities was less than 12 months.

Foreign Currency Risk

Our transactions are denominated in U.S. dollars, and, as a result, we do not have material exposure to currency exchange-rate risks. However, our coal is sold internationally in U.S. dollars and, as a result, general economic conditions in foreign markets and changes in foreign currency exchange rates may provide our foreign competitors with a competitive advantage. If our competitors’ currencies decline against the U.S. dollar or against our foreign customers’ local currencies, those competitors may be able to offer lower prices for coal to customers. Furthermore, if the currencies of our overseas customers were to significantly decline in value in comparison to the U.S. dollar, those customers may seek decreased prices for the coal we sell to them. Consequently, currency fluctuations could adversely affect the competitiveness of our coal in international markets, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and

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communicated to our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In accordance with Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision of our CEO and our CFO, the effectiveness of disclosure controls and procedures as of June 30, 2023. Based on this evaluation, our CEO and our CFO concluded that our disclosure controls and procedures were effective as of June 30, 2023.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Disclosure Controls and Procedures

Our CEO, our CFO and other members of management do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Part II - Other Information

Item 1. Legal Proceedings

For a description of the Company’s legal proceedings, refer to Note 15, part (d), to the unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in the “Risk Factors” section contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, together with the cautionary statement under the caption “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q. These described risks are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Dividend Policy

Pursuant to the dividend policy adopted by the Board on May 3, 2022, the Board declared quarterly cash dividends of $0.44 and $0.50 per share on the Company’s common stock during the three months ended March 31, 2023 and June 30, 2023, respectively. Refer to Note 17 for subsequent event disclosures related to the Company’s dividend program. The holders of the Company’s common stock are entitled to receive such dividends, if any, when they are declared by the Board. Future dividends are subject to declaration by the Board and depend on Alpha’s future earnings and financial condition and other relevant factors. Refer to Note 6 for further information related to the Company’s dividend program.

Repurchase of Common Stock

The following table summarizes information about shares of common stock that were repurchased during the second quarter of 2023.

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	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (In thousands) (2)(3)(4)
April 1, 2023 through April 30, 2023	317,688	$	157.17	317,688	$	563,286
May 1, 2023 through May 31, 2023	380,007	$	145.95	380,007	$	507,826
June 1, 2023 through June 30, 2023	323,145	$	154.98	319,210	$	458,395
	1,020,840			1,016,905

(1) Includes 3,935 common shares repurchased from employees to satisfy the employees’ statutory tax withholdings upon the vesting of stock grants. Shares that are repurchased to satisfy the employees’ statutory tax withholdings are recorded in treasury stock at cost.

(2) On February 21, 2023, the Board approved an increase to the existing common share repurchase program that the Board adopted on March 4, 2022, bringing the total authorization to repurchase the Company’s stock to $1.2 billion. Refer to Note 6 for additional information.

(3) The Company adopted a capital return program in 2019, including a stock repurchase plan with no expiration date that permitted the Company to repurchase up to an aggregate amount of $100 million of the Company's common stock. The Company suspended this stock repurchase plan on October 1, 2019 and does not currently intend to make further repurchases under it.

(4) We cannot estimate the number of shares that will be repurchased because decisions to purchase are subject to market and business conditions, levels of available liquidity, our cash needs, restrictions under agreements or obligations, legal or regulatory requirements or restrictions, and other relevant factors. This amount does not include stock repurchase related fees and excise taxes.

Refer to Note 6 for information about repurchases related to warrants during the current quarter.

Item 4. Mine Safety Disclosures

Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Quarterly Report on Form 10-Q.

Item 5. Other Information

None.

Item 6. Exhibits

Refer to the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	ALPHA METALLURGICAL RESOURCES, INC.
Date: August 4, 2023	By:	/s/ J. Todd Munsey
	Name:	J. Todd Munsey
	Title:	Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

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Exhibit Index


Exhibit No.			Description of Exhibit
3.1			Second Amended and Restated Certificate of Incorporation of Alpha Metallurgical Resources, Inc., as amended through January 22, 2021 (Incorporated by reference to Exhibit 3.1 on Form 10-Q of Alpha Metallurgical Resources, Inc. filed on November 5, 2021)
3.2			Fourth Amended and Restated Bylaws of Alpha Metallurgical Resources, Inc. (Incorporated by reference to Exhibit 3.1 on Form 8-K of Alpha Metallurgical Resources, Inc. filed on December 2, 2022)
31*			Certifications Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002
32**			Certifications Pursuant to 18 U.S.C. §1350, As Adopted Pursuant to §906 of the Sarbanes-Oxley Act of 2002
95*			Mine Safety Disclosure Exhibit
101*			The following financial information from Alpha Metallurgical Resources, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Stockholders’ Equity, and (vi) Notes to the Condensed Consolidated Financial Statements.
104*			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith

** Furnished herewith